THE  OI-FICE  OF 

COUNTY  TREASUR 

of 

COOK  COUNTY 

ILLINOIS 


AN  INQUIRY  INTO  THE  AD^  : 
WITH  SPECIAL  REFEK 
OF  INTEREST  <    • 


K  t  P  0  K  T       I*  R  E  P  A  R  E  D        o  V         i   H  L 

CHICAGO  BUREAU  OF  PUBLIC  EFFICIENCY 


NOVEMBER.   1913 


PRIOR  PUBLICATIONS. 


^lAethod  of  Preparing  and  Administering  the  Budget  of  Cook  County, 

lUinoifi.      January,  1911. 
fl    Proposed  Purchase  of  Voting  Machines  by  the  Board  of  Election 

Commissioners  of  the  City  of  Chicago.    May,  1911.     (Out  of 

Print.)  .     :    .    , 

r?    Street  Pavement  Laid  in  the  City  of  Chicago:    An  Ibqniry  Into 

Paving  Materials,  Methods  and  Besults.    June,  1911.     (Qn%  of 

Print.) 

4  Electrolysis  of  Water  Pipes  in  the  Oity  of  Chicago.    July,   1911. 

(Out  of  Print.)  X 

5  Administration  of  the  OfHce  of  Becorder  of  Cook  County,  Illinois. 

Septemher,  1911. 

6  A  Plea  for  Publicity  in  the  Olftce  of  County  Treasurer.    October, 

1911.     (Out  of  Print.) 

7  Eepairing  Asphalt  Pavement:    Work  Done  for  the  City  of  Chicago 

Under  Contract  of  1911.    October,  1911.     (Out  of  Print.) 

8  The  Mimicipal  Court  Acts:     Two  Belated  Propositions  Upon  Which 

the  Voters  of  Chicago  Will  Be  Asked  to  Pass  Judgment  at  the 
Election  of  November  7— Vote  No,  October  31,  1911.  (Out  of 
Print.) 

9  The  Water  Works  System  of  the  City  of  Chicago.    By  Dabney  H. 

Maury.    December,  1911. 

10  Bureau  of  Streets;  Civil  Service  Commission;  and  Special  Assess- 

ment Accounting  Syst^n  of  the  City  of  Chicago.  December, 
1911. 

11  Administration  of  the  Office  of  Coroner  of  Cook  County,  Illinois. 

December,  1911. 
12 .  Administration  of  the  Oifice  of  Sheriff  of  Cook  County,  Illinois.    De- 
cember, 1911.     (Out  of  Print.) 

13  Administration  of  the  Office  of  Clerk  of  the  Circuit  Court  and  of  the 

Office  of  Clerk  of  the  Superior  Court  of  Cook  County,  Illinois. 
December,  1911. 

14  The  Judges  and  the  County  Fee  Offices.    December  19,  1911. 

15  G^enera^  Summary  and  Conclusions  of  Beport  on  the  Park  Ctovem- 

ments  of  Chicago.    December,  1911. 

16  The  Park  Governments  of  Chicago:    An  Inquiry  Into  Their  Organ- 

ization and  Methods  of  Administration.    December,  1911. 

17  Offices  of  the  Clerks  of  the  Circuit  and  Superior  Courts:    A  Supple- 

mental Inquiry  Into  Their  Organization  and  Methods  of  Admin- 
istration.   November,  1912. 

18  Administration  of  the  Office  of  the  Clerk  of  the  County  Court  of 

Cook  County,  Illinois.    November,  1912. 

19  Office  of  Sheriff  of  Cook  County,  Pilinois:    A  Supplemental  Inquiry 

Into  Its  Organization  and  Methods  of  Administration.  Novem- 
ber, 1912. 

S6  Orowing  Cost  Of  Elections  In  Chicago  and  Cook  County.  December 
$0,  1912. 

81  The  Voting  Machine  Contract.  A  Protest  Against  Its  Becognitlon 
In  Any  Form  by  the  City  Council  of  the  Oity  of  Chicago.  Jan- 
uary i,  1913. 


THE  OFFICE  OF 

COUNTY  TREASURER 

of 
COOK  COUNTY 

ILLINOIS 


AN  INQUIRY  INTO  THE  ADMINISTRATION  OF  ITS  FINANCES 

WITH  SPECIAL  REFERENCE  TO  THE  QUESTION 

OF  INTEREST  ON  PUBLIC  FUNDS 


REPORT       PREPARED       BY       THE 
CHICAGO  BUREAU  OF  PUBLIC  EFFICIENCY 


315  PLYMOUTH  COURT 


CHICAGO  BUREAU 

OF 

PUBLIC  EFFICIENCY 


TRUSTEES 


Julius  Rosen wald.  Chairman 
Alfred  L.  Baker,  Treasurer 
Onward  Bates  Charles  R.  Crane 

Henry  B.  Favill  Walter  L.  Fisher 

George  G.  Tunell  Charles  E.  Merriam 

Victor  Elting 


Harris  S.  Keeler,  Director 
George  C.  Sikes,  Secretary 
T.  W.  Betak,  Accountant 


i^ETER  White,  Consulting  Accountant 


TABLE  OF  CONTENTS. 


Page. 

FOREWORD    4 

INTRODUCTION     5 

SUMMARY  AND  CONCLUSIONS   11 

Interest  on  Public  Funds 11 

How  the  County  Treasurer  Administers  and  Accounts  for  Public 
Moneys    15 

Remittances  to  Taxing  Bodies 17 

The  Treasurer 's  Compensation 17 

Needed  Legislative  Changes 18 

Some  Pertinent  Questions 20 

TEXT  OF  REPORT 21 

The  Powers,  Duties,  and  Compensation  of  the  County  Treasurer. 
Needed  Legislative  Changes 21 

Duties  of  Treasurer 22 

Duties  of  County  Collector 22 

Duties  of  Town  Collector 23 

Duties  of  Town  Supervisor 24 

The  Treasurer's  Control  of  Public  Funds 24 

The  Bonds  Required  of  the  County  Treasurer 25 

The  Treasurer's  Compensation  26 

Needed  Legislative  Changes 29 

The  Manner  in  Which  the  Funds  are  Handled  and  the  Accounts 
Thereof  Kept  and  Audited 31 

Permission  to  Inspect  Books  Demanded  by  Bureau  Trustees. . .  .31 

Inspection  of  the  "Public"  Records  Permitted — What  They 
Disclosed 32 

The  "Treasurer's"  Records  and  Accounts 33 

The  ' '  Collector 's ' '  Records  and  Accounts 38 

The  ' '  Collector 's ' '  So  Called  ' '  Private ' '  Records 39 

The  "Collector's"  "Public"  Records 40 

The  "Public"  Records— What  They  Showed 41 

Cash  Receipts  Withheld  from  "Public"  Records 42 

Conditions  Resulting  from  the  Manner  in  Which  the  Ac- 
counts are  Operated 46 

Remittances  to  Taxing  Bodies 49 

The  Audit  of  the  Treasurer's  Accounts 51 

The  Question  of  Interest  on  Funds  in  the  Custody  of  the  County 
Treasurer 53 

Mr.  O'Connell  Refuses  to  Turn  Over  Interest  Earned  in  1912.  .57 

The  Investigation  by  the  Bureau 59 

Procedure  Employed  in  Estimating  Cash  Receipts 62 

The  Interest  Computations  of  the  Bureau 66 


963264 


FOREWORD. 


This  report  is  in  line  with  the  general  purpose  of  the 
Chicago  Bureau  of  Public  Efficiency  to  furnish  the  pub- 
lic with  exact  information  concerning  public  revenues  and 
expenditures.  It  is  submitted  to  the  tax-paying  public 
of  Cook  County  in  the  hope  that,  through  the  publicity 
which  it  will  give  to  the  scandalous  conditions  which  it 
discloses,  it  may  be  instrumental  in  bringing  about  a 
thorough  investigation  of  the  manner  in  which  the  Coun- 
ty Treasurer  of  Cook  County  handles  and  accounts  for 
the  public  moneys,  including  the  interest  earned  thereon, 
which  are  entrusted  to  his  custody,  and  in  putting  an  end 
to  many  long-standing  abuses  connected  with  the  admin- 
istration of  the  office  of  County  Treasurer. 

Chicago  Bureau  of  Public  Efficiency, 

Habris  S.  Keeler, 
Director. 


INTRODUCTION. 


In  the  accompanying  report  on  The  Office  of  County 
Treasurer  of  Cook  County,  the  Chicago  Bureau  of  Pub- 
lic EflBciency  presents  the  situation  as  it  exists  to-day 
with  respect  to  the  manner  in  which  the  County  Treas- 
urer of  Cook  County  handles  the  public  moneys  which 
are  entrusted  to  his  custody. 

The  various  funds  handled  by  the  Treasurer  aggregate 
in  amount  approximately  $55,000,000  each  year  and  per- 
haps the  most  important  aspect  of  the  situation  with 
which  this  report  deals  is  the  question  of  interest  on  the 
very  large  sums  which  are  from  time  to  time  subject  to 
the  control  of  this  official. 

The  question  of  the  retention,  by  public  officials  en- 
trusted with  the  custody  of  public  moneys,  of  the  inter- 
est earned  on  those  moneys,  when  they  have  been  placed 
on  deposit  in  the  banks,  is  a  matter  which  has  long  at- 
tracted public  attention  and  toward  which,  in  recent 
years,  both  the  public  and  the  custodians  of  the  funds 
have  shown  a  marked  change  of  attitude. 

There  never  has  been  any  serious  controversy  as  to 
the  moral  right — and,  in  the  case  of  the  County  Treas- 
urer, as  to  the  legal  right — of  the  taxpayers  to  such  in- 
terest when  it  has  been  earned.  On  the  other  hand,  it  is 
a  well  recognized  fact  that  a  great  deal  of  this  interest 
has  not  been  turned  into  the  public  treasury.  It  has  been 
a  common  practice  in  the  past  for  the  custodians  of  these 
funds  to  regard  the  interest  as  a  legitimate  "spoil"  of 
office,  and  to  retain  it  for  their  own  use.  This  has  gen- 
erally been  done  under  the  pretext  that  they  were  under 


6  Chicago  Bureau  of  Public  Efficiency 

no  legal  obligation  to  account  for  the  interest.  The  prac- 
tice has  not  been  carried  on  openly,  however,  so  that  the 
public  might  know  the  nature  or  extent  of  the  operations 
involved.  Taxpayers  and  their  representatives  have 
been  denied  access,  not  only  to  the  interest  accounts  of 
these  officials,  but  to  the  general  accounts  of  the  funds  in 
their  hands.  Contracts  with  the  banks,  relating  to  inter- 
est payments,  and  even  the  names  of  the  depositaries 
themselves  have  been  concealed.  In  fact,  the  whole  ques- 
tion of  interest  on  public  funds  has  been  shrouded  in 
secrecy,  while  various  subterfuges  have  been  resorted  to 
to  keep  the  public  in  as  complete  ignorance  as  possible 
concerning  the  manner  in  which  the  public  money  has 
been  handled. 

A  glance  into  the  conditions  which  have  made  this  state 
of  affairs  possible  will  show  that  usually  such  legislation 
as  has  existed  on  the  subject  of  the  custody  of  public 
funds  has  clothed  the  custodians  of  these  funds  with  very 
wide  discretion  and  authority  in  the  handling  of  the 
moneys  entrusted  to  their  keeping,  without  requiring 
them  to  keep  complete  and  proper  accounts  subject  to 
thorough  and  disinterested  audits.  Not  infrequently, 
also,  the  financial  responsibility  which  these  officials  have 
been  required  to  assume  has  been  greater  than  it  should 
have  been,  and  the  compensation  provided  for  them  has 
not  been  at  all  in  proportion  to  this  responsibility  and 
the  duties  required  of  them.  In  nearly  every  instance 
where  there  has  been  a  failure  to  account  for  interest,  it 
will  be  found  that  the  Legislature  has  failed  to  pass  ade- 
quate laws  covering  the  manner  in  which  the  funds  should 
be  handled  and  the  accounts  thereof  kept,  as  well  as  to 
provide  for  a  proper  degree  of  publicity  with  respect  to 


County  Treasurer  of  Cook  County  7 

the  transactions  of  the  office  in  question.  All  of  the  fore- 
going conditions  are  to  be  found  to-day  in  connection 
with  the  administration  of  the  funds  entrusted  to  the 
County  Treasurer  of  Cook  County. 

Within  the  last  few  years  public  opinion,  which  former- 
ly had  seemed  to  accept  the  situation  as  inevitable  and 
had  been  disposed  to  condone  the  offense  when  public 
officials  failed  to  account  for  interest,  has  undergone  a 
complete  change  in  its  attitude  toward  the  interest  ques- 
tion. In  response  to  the  general  demand  for  a  changed 
order  of  things,  the  General  Assembly  has  passed  reme- 
dial leirislation  covering  particularly  State  funds  and  a 
portion  of  the  funds  in  the  hands  of  the  Citj'  Treasurer 
of  Chicago.  Other  public  bodies,  notably  the  Sanitary 
District,  and  the  South,  West,  and  Lincoln  Park  Boards, 
have  opened  their  books  to  public  inspection  and  have 
accounted  for  interest  on  their  bank  deposits. 

There  has  been  no  such  legislation,  however,  with  re- 
spect to  the  funds  handled  by  the  County  Treasurer.  As 
a  result  of  pre-election  pledges,  the  present  County 
Treasurer,  William  L.  0 'Council,  and  the  two  treasurers 
who  preceded  him  in  office,  Jolin  R.  Thompson  and  John 
J.  Ilanberg,  have  turned  over  to  the  County  certain  lump 
sums  as  interest  on  bank  deposits. 

It  is  a  serious  reflection  upon  the  men  who  have  held 
that  important  office,  tliat  no  Count>^  Treasurer  has,  as 
yet,  seen  fit  to  conduct  its  affairs  in  accordance  with  the 
spirit  of  the  times  which  demands  light  on  the  financial 
methods  of  public  officials  and  a  proper  accounting  for 
the  interest  on  the  funds  administered  by  them. 

This  report  has  been  prepared  primarily  for  the  pur- 
pose of  presenting  data  in  the  possession  of  the  Bureau 


8  Chicago  Bureau  of  Public  Efficiency 

bearing  on  the  question  of  interest  on  funds  handled  by 
the  County  Treasurer.  There  are  several  other  ques- 
tions connected  with  the  administration  of  these  funds, 
however,  which  are  so  closely  related  to  the  interest  ques- 
tion that  it  has  been  thought  best  to  include  a  discussion 
of  them  in  the  report.  Among  the  more  important  of 
these  matters  are  the  question  of  the  manner  in  which  the 
funds  are  handled  and  the  accounts  thereof  kept  and  aud- 
ited; the  question  of  the  right  of  taxpayers  to  inspect 
the  Treasurer's  records  and  accounts;  the  question  of  the 
extent  to  which  the  Treasurer  should  be  held  responsible 
for  the  funds;  and  the  question  of  the  Treasurer's  com- 
pensation. 

As  pointed  out  in  the  text  of  the  report,  the  County 
Treasurer  serves  in  three  important  capacities,  namely, 
as  ''treasurer,"  as  ''county  collector"  and  as  "town  col- 
lector." The  conduct  of  his  office  necessarily  involves  a 
large  amount  of  administrative  detail  not  directly  con- 
nected with  the  questions  considered  in  this  report.  No 
attempt,  therefore,  has  been  made  to  cover  the  business 
procedure  of  the  office  or  to  describe  in  detail  the  account- 
ing methods  employed  or  the  books  and  records  used,  ex- 
cept in  so  far  as  it  has  been  necessary  to  do  so  to  explain 
the  general  manner  in  which  the  moneys  coming  into  the 
control  of  the  Treasurer  are  handled  and  accounted  for. 

The  inquiry  upon  which  this  report  is  based  was  begun 
in  November,  1911.  The  presentation  of  the  matters  cov- 
ered by  the  report  has  been  delayed  by  the  refusal  of  the 
Treasurer  to  permit  the  examination  of  certain  impor- 
tant records  of  his  office. 

The  records,  the  examination  of  which  was  denied,  are 
kept  at  public  expense  and  by  public  employes,  but  per- 


County  Treasurer  of  Cook  County  9 

mission  to  inspect  them  was  refused  on  the  ground  that 
they  were  "private"  records.  The  matters  described 
on  pages  61-65  of  the  report  illustrate,  in  a  measure,  the 
burden  of  work  which  the  refusal  to  permit  an  examina- 
tion of  these  so-called  ** private"  records  imposed  upon 
the  Bureau. 

The  period  for  which  the  accounts  described  in  the  re- 
port were  examined  began  December  5,  1910,  and  ended 
December  21,  1911.  Upon  this  latter  date  the  books  of 
the  "treasurer"  were  closed  for  the  first  fiscal  year  of 
Mr.  O'Connell's  term  of  office.  The  interest  computa- 
tions cover  the  period  of  such  fiscal  year  only. 


SUMMARY  AND  CONCLUSIONS. 


INTEREST  ON  PUBLIC  FUNDS. 

Treasurer  "William  L.  0  'Connell  paid  over  to  the  Coun- 
ty, as  interest  earned  during  the  year  1911  on  bank  de- 
posits, $150,557.39.  The  Chicago  Bureau  of  Public  Ef- 
ficiency computes  the  interest  which  the  County  should 
have  received  from  the  funds  held  by  the  County  Treas- 
urer during  that  year  to  be  $281,526.18.  The  County  has 
received,  therefore,  $130,968.79  less  than  the  amount 
which  the  Bureau  estimates  should  have  been  received 
and  turned  over  by  the  County  Treasurer. 

The  exact  amount  of  money  actually  received  l)y  the 
County  Treasurer  as  interest,  or  any  equivalent  of  inter- 
est, on  public  funds  in  his  custody,  cannot  be  stated  with 
certainty.  The  reason  for  this  is  that,  according  to  the 
astonishing  statement  of  the  County  Treasurer,  he  has  no 
books  or  records  showing  where  and  when  he  made  de- 
posits of  public  funds  or  the  amount  of  the  interest  or 
other  returns  he  has  in  fact  received  for  the  use  of  these 
funds.  If  he  has  any  such  records,  he  refuses  to  disclose 
them. 

Moreover,  tiie  exact  amount  of  interest  which  the  fimds 
handled  by  the  Treasurer  might  have  earned  at  any  given 
rate,  if  they  had  been  deposited  promptly  in  the  banks, 
cannot  be  stated  with  certainty.  The  reason  for  this  is 
the  fact,  also  astonishing,  that  the  County  Treasurer 
maintains  two  classes  of  records, — namely,  those  which 
he  calls  "public"  records  and  those  which  he  calls  "pri- 
vate" records.  The  "public"  records  of  the  office  do  not 
contain  entries  showing  the  amount  of  his  cash  receipts 


12  Chicago  Bureau  of  Public  Efficiency 

from  day  to  day.  The  so-called  ''private"  records  do 
contain  such  entries,  but  the  Bureau  was  refused  permis- 
sion to  examine  them.  Because  of  these  conditions,  the 
Bureau  was  compelled  to  estimate  the  Treasurer's  daily 
cash  receipts  in  the  manner  set  forth  in  the  text  of  this 
report,  and  then  to  determine  the  amount  of  his  daily 
cash  balances  on  the  basis  of  such  estimated  receipts. 
Fortunately,  by  analyzing  the  records  to  which  the  Bu- 
reau did  obtain  access,  it  has  been  possible  to  make  a 
close  estimate  of  the  amounts  which  were  available  for 
deposit  and  upon  which  interest  should  have  been  earned 
and  paid  over  to  the  County. 

The  interest  figures  of  the  Bureau  are  based  upon  esti- 
mated average  daily  balances  and  a  rate  of  2^/4  per  cent. 
This  is  the  rate  paid  by  the  banks  on  funds  deposited  by 
the  City  of  Chicago.  The  Bureau  regards  this  rate  of 
2^  per  cent  as  conservative,  inasmuch  as  by  withholding 
remittances  from  the  City  and  other  taxing  bodies  the 
Treasurer  was  apparently  able  to  maintain  a  balance  of 
ten  million  dollars  or  more  continuously  for  a  period  of 
more  than  six  months. 

It  is  quite  probable,  however,  that  the  Treasurer  should 
have  received  and  turned  over  even  more  than  $281,- 
526.18  in  interest.  The  Treasurer  is  required  to  collect 
and  turn  over  to  the  County  penalties  in  the  form  of  in- 
terest at  the  rate  of  one  per  cent  a  month  on  all  de- 
linquent real  estate  taxes  collected  by  him  after  May  1. 
During  1911  he  turned  over  only  $113,663.24  as  collections 
received  from  this  source.  If  $113,663.24  is  all  he  re- 
ceived in  fact  from  this  source,  then  he  must  have  col- 
lected prior  to  May  2  more  than  the  amounts  which  the 
Bureau  has  estimated  he  collected  up  to  that  date.  In 
that  event,  the  interest  which  he  should  have  received 


County  Treasurer  of  Cook  County  13 

from  his  general  balances  should  have  been  even  greater 
than  $281,526.18,  the  amount  estimated  by  the  Bureau.  If 
he  collected,  prior  to  May  2,  only  the  amounts  which, 
from  the  records  available  to  it,  the  Bureau  has  esti- 
mated he  collected  up  to  that  date,  then  he  must  have 
received  as  penalties  for  delinquency  more  than  $113,- 
663.24.  One  of  the  alternatives  is  irresistible.  The  Bu- 
reau believes  that  the  correct  conclusion  is  that  he  has 
not  accounted  by  even  more  than  $130,968  for  all  the  in- 
terest on  general  balances  which  he  did  receive,  or  could 
have  received,  and,  in  the  full  discharge  of  his  duty  to 
the  public,  he  should  have  received  and  paid  over  to  the 
County. 

The  presumption  is  that  the  amount  of  money  handled 
by  the  Treasurer  during  1912  was  greater  than  that  han- 
dled by  him  in  1911  and  tliat,  therefore,  the  interest 
earned  during  1912  was  greater  than  that  earned  in  1911. 
Notwithstanding  this,  at  the  close  of  3912  he  tendered  to 
the  County  Board  only  $162,212.53  as  interest  on  his  de- 
posits of  that  year.  This  sum  was  tendered  condition- 
ally and  when  the  Board  declined  to  waive  any  claims 
which  the  County  might  have  on  account  of  interest  re- 
ceived by  him,  other  than  the  $162,212.53  tendered,  Treas- 
urer O'Connell  refused  to  pay  over  to  the  County  even 
that  amount  and  he  still  retains  it. 

The  Constitution  of  1S70  provides  that  all  fees,  per- 
quisities  and  emoluments  of  the  oflSce  of  County  Treas- 
urer shall  be  paid  into  the  County  treasury.  In  a  case 
presenting  conditions  analogous  to  those  which  exist  in 
Cook  County,  the  Supreme  Court  of  the  State  has  de- 
cided that  all  interest  received  on  bank  deposits  is  a  per- 
quisite or  emolument  of  the  office,  to  be  accounted  for 
and  paid  over  to  the  County. 


14  Chicago  Bureau  of  Pnhlic  Efficiency 

Notwithstanding  this  plain  provision  of  the  Constitu- 
tion and  the  manner  in  which  the  Supreme  Court  has 
interpreted  it  with  regard  to  interest  earnings,  the  pres- 
ent County  Treasurer  of  Cook  County  denies  the  legal 
right  of  the  County  to  interest  received  on  his  bank  de- 
posits. His  predecessors  in  office  have  taken  the  same 
position. 

It  is  only  since  1902  that  the  County  has  received  any 
interest  on  funds  deposited  by  the  County  Treasurer. 
The  treasurers  who  have  held  office  since  that  date  have 
turned  over  certain  lump  sums  each  year,  but  have  in- 
sisted that  they  did  so  in  pursuance  of  pre-election 
pledges,  not  because  of  any  legal  obligation  on  their  part 
to  make  the  payments.  There  never  has  been  any  de- 
tailed accounting  with  respect  to  such  pajTnents.  Not 
even  the  rate  at  which  the  amount  turned  in  was  com- 
puted has  been  disclosed. 

The  Bureau  recommends  to  the  County  Board : 

1.  That  it  demand  from  Treasurer  0 'Council  a  full 
and  complete  accounting  in  the  matter  of  interest  on  bank 
deposits  and  of  all  other  fees,  perquisites,  and  emolu- 
ments of  his  office,  and 

2.  That  in  case  of  his  failure  to  make  such  an  account- 
ing, the  Board  institute  legal  proceedings,  not  only  to 
compel  him  to  render  an  account,  but  to  recover  such  in- 
terest or  other  fees,  perquisites  or  emoluments,  if  any, 
as  he  may  have  failed  to  pay  over  to  Cook  County. 


County  Treasurer  of  Cook  County  15 

HOW  THE   COUNTY  TREASURER  ADMINISTERS  AND   ACCOUNTS   FOR 

PUBLIC  MONEYS. 

In  administering  the  public  moneys  entrusted  to  his 
keeping,  Treasurer  O'Connell  maintains  two  classes  of 
records, — namely,  ''public"  records  and  so-called  ** pri- 
vate" records.  Both  are  used  to  record  the  financial 
transactions  of  his  oflSee;  both  are  kept  by  public  em- 
ployes at  public  expense.  Important  entries  relative  to 
the  receipt  of  taxes  never  appear  upon  the  "public" 
records. 

The  entry  of  the  receipt  of  millions  of  dollars  of  taxes 
and  special  assessments  collected  by  him  each  year  is 
withheld  from  his  ** public"  ledgers  for  long  periods 
after  the  time  when  the  money  is  received. 

The  Bureau  estimates  that  of  $26,493,422.39  entered  of 
record  Decemlx^r  14,  1911,  approximately  $23,000,0(K)  was 
actually  received  prior  to  June  1, 1911 ;  and  tliat  practical- 
ly all  of  $2,197,347.70  in  railroad  taxes  put  upon  the  books 
September  15  was  collected  prior  to  May  1. 

Treasurer  O'Connell  denies  the  right  of  citizens  and 
taxpayers  to  examine  the  so-called  ''private"  records  of 
his  office.  lie  has  even  refused  to  permit  the  County 
Board  to  examine  any  records  of  his  office  except  his 
"public"  records. 

By  concealing  his  real  transactions  with  the  banks  and 
also  the  amount  of  cash  received  by  him  daily,  the  County 
Treasurer  succeeds  in  preventing  not  only  the  tax-pay- 
ing public,  but  also  the  County  Board,  which  is  charged 
with  the  duty  of  approving  liis  accounts,  from  ascertain- 
ing whether  or  not  he  has  accounted  for  all  interest 
earned  on  the  public  funds  while  they  are  in  his  posses- 
sion. 

By  withholding  from  the  "public"  records  for  long 


16  Chicago  Bureau  of  Public  E-fJiciency 

periods  entries  showing  the  receipt  of  moneys  collected 
on  account  of  taxes  and  special  assessments,  the  Treas- 
urer keeps  the  City  and  other  taxing  bodies  in  ignorance 
of  the  respective  amounts  to  the  payment  of  which  they 
are  from  time  to  time  entitled.  He  thus  avoids  making 
remittances  to  them  which  they  might  otherwise  demand. 

Because  of  the  policy  of  secrecy  which  surrounds  the 
administration  of  the  Treasurer's  office  and  his  refusal 
to  permit  an  examination  of  those  records  of  the  office 
which  he  calls  ** private"  records  but  which  are  kept  by 
public  employes  at  public  expense,  almost  insurmount- 
able difficulties  are  met  with  by  citizens  and  taxpayers 
seeking  information  concerning  the  financial  transactions 
of  the  office  and  the  manner  in  which  Treasurer  O'Con- 
nell  handles  public  funds. 

Notwithstanding  the  enormous  sums  of  public  money 
which  the  County  Treasurer  handles,  there  is  absolutely 
no  check  or  audit  of  his  accounts,  except  such  as  may  be 
conducted  by  himself  and  his  bondsmen. 

The  Bureau  takes  the  position  that  public  business — 
especially  the  public  business  of  an  official  like  the  Coun- 
ty Treasurer  who  is  entrusted  with  the  custody  of  public 
funds — should  be  carried  on  publicly.  It  is  the  duty  of 
the  County  Board  to  examine  and  to  approve  or  correct 
the  accounts  of  the  County  Treasurer.  The  conduct  of 
Treasurer  O'Connell  in  refusing  to  permit  the  County 
Board  and  citizens  and  taxpayers  to  examine  all  of  his 
books  and  records  cannot  be  too  severely  condemned. 
The  Bureau  recommends  that  the  Board  insist  upon  its 
rights  to  examine  these  accounts  and  that  it  take  steps 
immediately  to  compel  Treasurer  O'Connell  to  submit 
all  such  accounts  and  records  to  a  complete  and  disinter- 
ested audit. 


County  Treasurer  of  Cook  County  17 

REMITTANCES  TO  TAXING  BODIES. 

In  making  remittances  to  the  City  and  other  taxing 
bodies  on  account  of  taxes  and  special  assessments  col- 
lected for  them,  Treasurer  O'Connell  entirely  disregards 
the  plain  provisions  of  the  statutes.  His  policy  is  to 
withhold  collections  until  the  urgent  needs  of  the  taxing 
bodies  for  money  make  it  necessary  for  him  to  pay  it 
over. 

The  present  Treasurer  has  repeatedly  complained  of 
the  responsibility  which  the  statutes  impose  upon  him 
in  making  him  liable  for  the  safe  keeping  of  funds  col- 
lected by  him  until  he  pays  them  over  to  the  taxing  bodies. 
Nevertheless,  he  has  actually  increased  the  burden  of  tliis 
responsibility  by  withholding  collections  after  the  time 
when  the  taxing  bodies  were  legally  entitled  to  receive 

them. 

THE  TREASURER'S  COMPENSATION. 

Under  the  Constitution  of  Illinois,  the  County  Treas- 
urer is  entitled  to  receive  as  his  only  compensation  a  sal- 
ary to  be  fixed  by  law  which  shall  not  be  as  much  as  the 
lawful  compensation  of  a  Circuit  Court  Judge — at  pres- 
ent $10,000  a  year.  The  Legislature  has  fixed  the  Treas- 
urer's salar}'  at  $4,000.  With  the  possible  exception  of 
his  bondsmen,  no  person  but  himself  knows  what  the  act- 
ual compensation  of  the  Treasurer  is.  Admittedly  it  is 
many  times  $4,000  a  year. 

As  ex-officio  "town  collector"  of  each  of  the  seven  Chi- 
cago towns,  he  retains  $1,500  in  commissions — an  aggre- 
gate of  $10,500  a  year.  He  also  retains  two  per  cent  on 
all  inheritance  taxes  collected  by  him.  In  1911  these  com- 
missions amounted  to  $20,617.64.  During  the  year  1911, 
his  total  admitted  compensation,  therefore,  was  $35,- 
117.64. 


18  Chicago  Bureau  of  Public  E-fJiciency 

Under  a  recent  act  of  the  Legislature,  the  County 
treasurers  hereafter  elected  may  claim  an  additional 
$10,500  in  "town  collector's"  commissions.  Inheritance 
tax  fees  are  steadily  increasing,  and,  if  the  present  prac- 
tice of  retaining  them  is  continued,  the  Treasurer's  ad- 
mitted compensation  may  soon  exceed  $50,000  a  year. 

It  is  the  opinion  of  the  Bureau  that  the  salary  of  $4,000 
a  year  fixed  by  the  Legislature  is  the  maximum  compen- 
sation to  which  the  Treasurer  is  at  present  legally  en- 
titled. It  is  the  further  opinion  of  the  Bureau  that  he 
has  no  right  to  retain  either  the  "town  collector's"  com- 
missions or  the  inheritance  tax  fees  above  mentioned. 

In  \^ew  of  the  responsibilities  with  which  the  Treas- 
urer is  charged  and  the  amount  and  nature  of  the  bonds 
which  he  is  required  to  furnish,  a  salary  of  $4,000  is  in- 
adequate, but  this  furnishes  no  excuse  for  the  retention 
of  interest  on  the  public  funds  or  of  other  fees,  per- 
quisites and  emoluments  of  his  office.  The  County  Treas- 
urer has  no  right  to  put  his  hands  in  the  till  and  take 
the  public  moneys  merely  because  the  law  does  not  give 
him  an  adequate  salary. 

NEEDED  LEGISLATIVE  CHANGES. 

To  remedy  the  conditions  at  present  surrounding  the 
administration  of  the  funds  entrusted  to  the  County 
Treasurer  in  his  several  capacities,  the  Bureau  recom- 
mends the  enactment  of  legislation  for  the  following 
purposes : 

1.  To  make  it  mandatory  upon  the  Treasurer  to 
deposit  such  funds  in  banks  to  be  designated  by  the 
County  Board;  such  deposits  to  be  made  upon  con- 
ditions similar  to  those  which  now  obtain  with  re- 
spect to  the  deposit  of  the  funds  of  the  City  of  Chi- 
cago. 


County  Treasurer  of  Cook  County  19 

2.  To  relieve  the  Treasurer  of  all  responsibility 
for  such  funds  when  he  has  deposited  the  same  in 
such  banks  and  while  in  tlie  custody  of  the  banks,  and 
to  peiTnit  the  witlidrawal  of  the  funds  from  the  banks 
upon  the  order  of  the  Treasurer  only  when  accom- 
panied by  a  warrant  or  order  signed  by  some  other 
officer  to  be  designated  for  such  purpose. 

3.  To  authorize  the  County  Board  to  contract  for 
the  pajTuent  of  interest  on  such  bank  deposits  and 
to  prohibit  the  County  Treasurer,  or  any  other  pub- 
lic official,  from  retaining  any  of  the  interest  accru- 
ing on  such  deposits,  or  any  profit,  perquisite,  or 
emolument  on  account  thereof. 

4.  To  provide  for  the  keeping  of  proper  accounts 
in  connection  with  tl:o  a<lministration  of  such  funds 
and  tlio  interest  thereon;  for  the  examination  and 
audit  of  such  accounts  by  a  disinterested  officer  or 
agency;  and  for  an  ade(}uate  degree  of  publicity 
concerning  the  manner  in  which  such  funds  are  han- 
dled and  all  of  the  records  and  accounts  thereof  kept. 

5.  To  make  suitable  provisions  concerning  the  na- 
ture and  amount  of  the  bonds  to  be  furnished  by  the 
Treasurer. 

6.  To  proNnde  definite  and  adequate  compensation 
for  the  Treasurer. 

In  order  that  legislation  of  the  nature  above  recom- 
mended may  be  enacted  so  as  to  become  effective  at  the 
time  that  the  next  County  Treasurer  takes  office,  the 
Bureau  recommends  to  His  Excellency,  Governor  Edward 
F.  Dunne,  that  in  case  he  shall  convene  the  Legislature 
in  special  session  he  include  the  subject  of  such  legisla- 
tion among  the  matters  to  be  considered  at  such  special 
session. 


20  Chicago  Bureau  of  Public  Efficiency 

SOME  PERTINENT  QUESTIONS. 

In  view  of  Treasurer  O'Connell's  often  repeated  state- 
ment that  he  has  turned  over  or  tendered  to  the  County 
all  of  the  interest  which  has  accrued  on  the  public  funds 
held  by  him,  the  Bureau  suggests  the  following  pertinent 
questions : 

1.  Why  did  Treasurer  O'Connell  refuse  to  pay 
over  to  the  County  the  $162,212.53,  tendered  as  in- 
terest earned  in  1912,  unless  the  County  would  waive 
its  claim  to  any  additional  interest  received  by  him? 
(See  pages  57-59.) 

2.  Why  does  he  keep  no  books  or  records  showing 
his  interest  or  deposit  accounts  ^vith  the  banks? 
(See  pages  33,  59.) 

3.  Why  does  he  maintain  both  ''public"  and  ''pri- 
vate" records?     (See  pages  31-32,  38-41.) 

4.  Why  does  he  fail  to  show  upon  the  "public" 
records  the  receipt  of  millions  of  dollars  in  tax  col- 
lections until  months  after  the  money  is  actually  re- 
ceived?   (See  pages  42-46.) 

5.  Why  does  he  cling  tenaciously  to  tax  collec- 
tions after  the  time  when  the  City  and  other  taxing 
bodies  are  entitled  to  them?     (See  pages  49-50.) 

6.  Why  does  he  refuse  to  permit  the  County 
Board  to  examine  and  audit  his  accounts?  (See 
page  51.) 

7.  Why  does  he  refuse  to  permit  citizens  and  tax- 
payers to  examine  the  so-called  "private"  records 
of  his  office?    (See  pages  32,  61.) 

8.  Does  he  fear  that  an  examination  of  his  books 
will  disclose  that  he  has  not  turned  over  all  of  the 
interest  which  has  accrued,  or  that  such  an  examina- 
tion will  show^  that  he  is  not  competent  to  handle 
the  funds  entrusted  to  him  to  the  advantage  of  the 
tax-paying  public? 


THE  OFFICE  OF 

County  Treasurer 

OF 

COOK  COUNTY. 


AN    INQUIRY    INTO   THE   ADMINISTRATION  OF   ITS  FINANCES    WITH 

SPECIAL  REFERENCE  TO  THE  QUESTION  OF 

INTEREST  ON  PUBLIC  FUNDS. 


THE  POWERS.  DUTIES.  AND  COMPENSATION  OF  THE 
COUNTY  TREASURER.    NEEDED  LEG- 
ISLATIVE CHANGES. 

The  County  Treasurer  of  Cook  County  is  ex-oficio 
county  collector.  He  is  also  ej>-officio  town  collector  and 
to\m  supervisor  of  each  of  the  seven  townships  (South 
Chicago,  Hyde  Park,  Lake,  West  Chicago,  North  Chicago, 
Lake  View,  and  Jefferson)  which  lie  wholly  within  the 
territorial  limits  of  the  City  of  Chicago. 

It  should  not  be  inferred  from  the  foregoing  statement, 
however,  that  the  County  Treasurer  holds  16  separate 
and  distinct  offices.  There  is,  in  fact,  but  one  office — 
that  of  County  Treasurer.  The  duties  which  he  performs 
under  the  titles  of  ''county  collector,"  ''town  collector," 
and  "town  supervisor,"  respectively,  are  additional  du- 
ties which  the  Legislature,  without  creating  any  addi- 
tional offices,  has  imposed  upon  the  Treasurer.  These 
additional  duties  are  distinct,  nevertheless,  from  the  du- 
ties which  he  performs  as  "treasurer," 


22  Chicago  Bureau  of  Public  Efficiency 

DUTIES  OF  TREASURER. 

As  ''treasurer,"  his  duties  involve  primarily  the  cus- 
tody and  disbursement  of  the  revenues  and  funds  of 
Cook  County.  The  Legislature  has  also  required  the 
"treasurer"  to  act  as  inheritance  tax  collector  for  the 
State  and  has  designated  him  as  the  depositary  and  cus- 
todian of  certain  other  funds  which  do  not  belong  to  the 
County. 

DUTIES  OF  COUNTY  COLLECTOR. 

As  "county  collector,"  his  duties  are  chiefly  those  of  a 
collector  of  delinquent  taxes  and  special  assessments 
which  he  subsequently  turns  over  to  the  proper  author- 
ities of  the  State,  County,  City,  Sanitary  District,  Park 
Boards,  and  other  taxing  bodies.  With  the  exception  of 
taxes  levied  on  railroad  property  and  on  the  capital  stock 
of  telegraph  companies,  the  warrants  for  the  collection 
of  which  are  delivered  to  the  "county  collector"  in  the 
first  instance  by  the  County  Clerk,  all  of  the  moneys 
which  are  received  by  the  "county  collector"  are  received 
on  account  of  delinquent  taxes  and  delinquent  special  as- 
sessments. 

On  March  10,  of  each  year,  all  unpaid  general  taxes 
levied  on  both  personal  property  and  real  estate  become 
delinquent.  On  or  about  that  date,  the  collector's  war- 
rants in  the  hands  of  the  several  township  collectors  are 
turned  over  to  the  "county  collector."  Delinquent  spe- 
cial assessment  lists  are  also  turned  over  to  him  for  col- 
lection by  the  city,  village  and  other  local  collectors. 
These  latter  lists  are  usually  received  by  the  "county 
collector"  about  April  1.  Immediately  upon  the  receipt 
of  the  delinquent  general  tax  and  special  assessment 
books,  the  "county  collector"  begins  his  collections  of 


County  Treasurer  of  Cook  County  23 

the  items  which  appear  thereon  and  continues  to  make 
such  collections  until  the  books  are  closed  with  the  return 
by  him  to  the  County  Clerk  of  what  is  commonly  called 
"the  error  and  abatement  list" — a  list  of  those  items 
which  for  various  reasons  he  has  been  unable  to  collect. 
The  funds  handled  by  the  "county  collector"  consist 
largely  of  voluntary  pajTnents  made  to  him  on  account  of 
current  taxes  and  special  assessments,  and  the  proceeds 
of  the  sale  of  real  estate  sold  by  him  for  the  purpose  of 
enforcing  the  pajTnent  of  general  taxes  and  special  as- 
sessments levied  against  such  real  estate.  Relatively 
smgjl  amounts  come  into  his  hands  through  the  voluntary 
payment  or  enforced  collection  of  personal  property  taxes 
levied  prior  to  the  tax  which  is  currently  in  collection, 
and  also  through  the  redemption  of  real  estate  from  for- 
feitures on  account  of  both  delinquent  general  taxes  and 
si>ecial  assessments. 

DUTIES  OF  TOWNjJCOLLECTOR. 

As  "town  collector,"  the  Treasurer's  duties  are  sim- 
ply those  of  a  collector  of  current  general  taxes  levied 
on  both  real  and  personal  property.  As  "town  collector" 
he  begins  to  receive  such  taxes  as  soon  as  the  collector's 
warrants  are  turned  over  to  him  by  the  County  Clerk — 
usually  early  in  January — and  continues  his  collections 
until  March  10,  when  as  "county  collector"  he  goes 
through  the  formality  of  settling  his  accounts  with  him- 
self as  "town  collector"  and  as  "town  collector"  turns 
over  the  books  to  himself  as  "county  collector."  The 
taxes  which  he  collects  as  "town  collector"  he  subse- 
quently turns  over  to  the  State,  County,  City,  Sanitary 
District,  Park  Boards,  and  other  taxing  bodies. 


24  Chicago  Bureau  of  Public  Efficiency 

DUTIES  OF  TOWN  SUPERVISOR. 

As  "town  supervisor,"  the  Treasurer  is  custodian  of 
certain  moneys  raised  by  the  towns  of  Lake  View  and 
North  Chicago  for  the  acquisition  and  maintenance  of  the 
small  parks  under  the  jurisdiction  of  the  Lincoln  Park 
Board.  These  are  the  only  duties  which  he  performs  as 
''town  supervisor"  which  are  at  all  pertinent  to  the 
subject  matter  of  this  report 

THE  TREASURER'S  CONTROL  OF  PUBLIC  FUNDS. 

The  County  Treasurer  is  charged  by  law  with  the  duty 
of  receiving  and  disbursing  public  moneys  in  accordance 
with  the  provisions  of  the  statutes.  There  are  no  laws, 
however,  governing  the  disposition  of  the  funds  while 
they  are  in  his  custody.  He  may  lock  them  up  in  his 
own  vaults  or  in  other  depositories,  or  he  may  deposit 
them  in  the  banks  at  interest,  or  not,  at  his  option.  His 
power  of  control  over  the  funds,  during  the  period  that 
they  are  in  his  custody,  is  absolute.  On  the  other  hand, 
his  liability  to  keep  them  safely  and  to  disburse  them 
properly  is  also  absolute.  The  Legislature  has  never 
made  any  provision  by  which,  pending  the  final  disburse- 
ment of  the  funds,  he  can  relieve  himself  of  any  part  of 
this  responsibility. 

The  situation  above  described  contrasts  sharply  with 
the  conditions  under  which  the  City  Treasurer  of  Chicago 
administers  the  funds  entrusted  to  him.  The  City  Coun- 
cil is  authorized  to  designate  the  banks  in  which  City 
funds  shall  be  deposited  and  to  contract  for  the  payment 
of  interest  on  the  deposits.  The  banks  designated  by  the 
Council  are  required  to  furnish  bonds  to  the  City,  and 
when  the  City  Treasurer  has  deposited  City  funds  in  any 


County  Treasurer  of  Cook  County  25 

such  bank  he  is  thereby  discharged  from  all  responsibility 
for  the  moneys  thus  deposited.  After  City  funds  have 
been  once  deposited,  they  can  be  withdrawn  on  the  treas- 
urer's check  only  when  accompanied  by  the  city  comp- 
troller's warrant  for  the  amount.  Neither  the  City  Treas- 
urer nor  any  other  city  oflficer  is  permitted  to  retain  any 
of  the  interest  accruing  on  bank  deposits. 

The  provisions  made  by  the  Legislature  for  the  cus- 
tody of  City  funds  not  only  relieve  the  City  Treasurer  of 
the  very  heavy  responsibility  imposed  upon  the  County 
Treasurer,  but  they  insure  publicity  with  respect  to  the 
manner  in  which  the  funds  are  handled  and  proper  ac- 
counting for  the  interest  earned  thereon.  Similar  legis- 
lation should  be  enacted  with  respect  to  the  administra- 
tion of  funds  entrusted  to  the  County  Treasurer. 

THE  BONDS  REQUIRED  OF  THE  COUNTY  TREASURER. 

During  the  fiscal  year  1911,  the  County  Treasurer  han- 
dled a  total  of  approximately  $55,000,000;  the  largest 
amount  of  money  subject  to  his  control  at  any  one  time 
probably  did  not  exceed  $25,000,000.  As  security  for 
these  funds  he  was  required  to  furnish  two  bonds  aggre- 
gating in  amount  $11,000,000,  with  personal  sureties  in 
each  case.  Treasurer  0 'Council  has  stated  that,  in  order 
to  obtain  these  personal  bondsmen,  he  was  obliged  to  in- 
demnify them  against  loss  by  giving  a  surety  company 
bond  for  $750,000,  the  premium  upon  which  he  was  re- 
quired to  pay  out  of  his  personal  funds. 

The  City  Treasurer  of  Chicago  handles  about  $70,- 
000,000  annually.  The  average  daily  balance  of  City 
funds  on  deposit  is  estimated  at  approximately  $17,000,- 
000.    Since  1907,  and  until  within  the  past  few  months,  a 


26  Chicago  Bureau  of  Public  E-fJiciency 

bond  of  only  $2,000,000  has  been  required  of  the  City 
Treasurer.  This  bond  has  been  furnished  by  a  surety 
company  and  the  City  has  paid  the  premium.  The  rela- 
tively small  amount  of  this  bond  has  been  due  to  the  fact 
that  the  City  Treasurer  has  been  required  to  deposit  City 
funds  in  the  banks  designated  by  the  City  Council,  and 
when  he  has  done  so  his  responsibility  for  the  money  has 
ended.  There  has  been  no  occasion,  therefore,  for  re- 
quiring a  bond  of  the  size  furnished  by  the  County  Treas- 
urer. Such  additional  security  as  the  safety  of  the  funds 
required  has  been  furnished  by  the  banks  holding  them. 
So  far  as  the  general  corporate  fund  is  concerned,  the 
situation  just  described  still  obtains.  Within  the  last 
few  months,  however,  the  City  Treasurer  has  given  an 
additional  bond  for  $3,000,000  with  personal  sureties. 
The  reason  assigned  for  the  giving  of  this  additional 
bond  is  that  the  Legislature  has  made  no  provision  for 
depositing  school  funds  in  the  banks.  The  school  funds, 
therefore,  are  deposited  by  the  City  Treasurer  on  his 
own  responsibility,  which  continues  to  exist  until  he  dis- 
burses them  or  turns  them  over  to  his  successor. 

Manifestly,  the  policy  adopted  by  the  City  with  respect 
to  the  responsibility  with  which  the  City  Treasurer  shall 
be  charged  and  the  amount  of  bond  to  be  required  of  him 
is  superior  in  every  way  to  that  pursued  in  the  case  of 
the  County  Treasurer  with  respect  to  the  same  matters. 

THE  TREASURER'S  COMPENSATION. 

The  Constitution  of  1870  provides  that  the  County 
Treasurer  of  Cook  County  shall  receive,  as  his  only  com- 
pensation for  his  services,  a  salary  to  be  fixed  by  law, 
which  shall  not  be  as  much  as  the  lawful  compensation 


County  Treasurer  of  Cook  County  27 

of  a  Judge  of  the  Circuit  Court.  The  salary  of  a  Circuit 
Court  Judge  is  now  $10,000.  The  Constitution  provides 
further  that  all  fees,  perquisites,  and  emoluments,  above 
the  amount  of  said  salary,  shall  be  paid  into  the  County 
treasury. 

In  pursuance  of  this  provision  of  the  Constitution,  the 
Legislature  has  fixed  the  Treasurer's  salary  at  $4,000  a 
year,  but  no  person  other  than  the  Treasurer  himself, 
with  the  possible  exception  of  his  bondsmen,  knows  how 
much  the  total  compensation  of  the  oflfice  actually  amounts 
to.  Admittedly,  it  is  many  times  $4,000  a  year.  As 
"town  collector"  of  each  of  the  seven  Chicago  townships, 
he  retains  $1,500  in  commissions — an  aggregate  of  $10,- 
500  a  year.  He  also  retains  two  per  cent  on  all  inher- 
itance taxes  collected  by  him.  In  1911,  these  commis- 
sions amounted  to  $20,G17.G4,  so  that  during  tliat  year 
his  total  admitted  compensation  was  $35,117.64.  Under 
a  recent  act  of  the  Legislature,  County  Treasurers 
hereafter  elected  may  claim  an  additional  $10,500  in 
"town  collector's"  commissions.  Inheritance  tax  fees 
are  steadily  increasing  and  if  the  present  practice  of  re- 
taining them  is  continued,  the  Treasurer's  admitted  com- 
pensation may  soon  exceed  $50,000  a  year. 

The  Supreme  Court  of  this  State  has  decided  that  the 
Legislature,  in  making  the  Treasurer  ex-ofjicio  "county 
collector,"  did  not  create  another  oflSce,  but  simply  im- 
posed additional  duties  upon  the  Treasurer;  therefore, 
the  commissions  provided  by  law  for  the  "county  col- 
lector" are  fees  of  the  Treasurer's  oflfice  which,  under 
the  constitutional  provision  referred  to,  he  is  prohibited 
from  retaining  for  his  own  use.  The  courts  have  not 
passed  on  this  question  with  respect  to  the  "town  col- 


28  Chicago  Bureau  of  Public  Efficiency 

lector's"  commissions,  but  the  foregoing  principles  and 
reasoning  seem  applicable  to  them  and  seem  to  bar  the 
legal  right  of  the  Treasurer  to  retain  any  part  of  the 
$10,500  'Hown  collector's"  commissions  now  retained  by 
him. 

The  inheritance  tax  act  authorizes  the  Treasurer  ''to 
retain  two  per  cent  on  all  taxes  paid  and  accounted  for 
by  him  under  this  act,  in  full  for  his  services  *  *  * 
in  addition  to  his  salary  or  fees  now  allowed  by  law." 
Clearly,  the  commission  thus  provided  for  is  not  a  ''sal- 
ary," which  the  Constitution  requires  shall  be  fixed  by 
law  as  the  only  compensation  to  which  the  Treasurer 
shall  be  entitled.  Moreover,  if  in  effect  this  section  of 
the  inheritance  tax  act  authorizes  the  Treasurer  to  retain 
compensation  in  excess  of  the  maximum  allowed  by  the 
Constitution,  the  section  would  seem  to  be  plainly  uncon- 
stitutional. A  more  reasonable  interpretation  of  the  sec- 
tion is  to  regard  the  commissions  authorized  as  fees  of 
the  Treasurer's  office  to  be  turned  into  the  County  treas- 
ury. Such  a  construction  has  been  adopted  by  the  Su- 
preme Court  in  an  analogous  case  concerning  fees  author- 
ized for  the  State  Treasurer. 

That  the  County  Treasurer  personally  is  not  entitled 
to  such  commissions  seems  scarcely  open  to  controversy. 

It  is  the  opinion  of  the  Bureau  that  the  salary  of  $4,000 
a  year  fixed  by  the  Legislature  is  the  maximum  compen- 
sation to  which  the  Treasurer  is  at  present  legally  en- 
titled. In  view  of  the  responsibilities  with  which  he  is 
charged  and  the  amount  and  nature  of  the  bonds  he  is 
required  to  furnish,  such  a  salary  is  inadequate.  It 
should  be  raised  to  the  maximum  which  may  be  allowed 
by  the  Constitution  of  the  State. 


County  Treasurer  of  Cook  County  29 

NEZDEX)  LEGISLATIVE  CHANGES. 

To  remedy  the  conditions  at  present  surrounding  the 
administration  of  the  funds  entrusted  to  the  County 
Treasurer  in  his  several  capacities,  the  Bureau  recom- 
mends the  enactment  of  legislation  for  the  following  pur- 
poses : 

1.  To  make  it  mandatory  upon  the  Treasurer  to 
deposit  such  funds  in  banks  to  be  designated  by  the 
County  Board ;  such  deposits  to  be  made  upon  condi- 
tions similar  to  those  which  now  obtain  with  respect 
to  the  deposit  of  the  funds  of  the  City  of  Chicago. 

2.  To  relieve  the  Treasurer  of  all  responsibility 
for  such  funds  when  he  has  deposited  the  same  in 
such  banks  and  while  in  the  custody  of  the  banks, 
and  to  permit  the  withdrawal  of  the  funds  from  the 
banks  ui>on  tlie  order  of  the  Treasurer  only  when 
accompanied  by  a  warrant  or  order  signed  by  some 
other  officer  to  be  designated  for  such  purpose. 

3.  To  authorize  the  County  Board  to  contract  for 
the  payment  of  interest  on  such  bank  deposits  and  to 
prohibit  the  County  Treasurer,  or  any  other  public 
official,  from  retaining  any  of  the  interest  accruing 
on  such  deposits,  or  any  profit,  perquisite  or  emol- 
ument on  account  thereof. 

4.  To  provide  for  the  keeping  of  proper  accounts 
in  connection  with  the  administration  of  such  funds 
and  the  interest  thereon;  for  the  examination  and 
audit  of  such  accounts  by  a  disinterested  officer  or 
agency;  and  for  an  adequate  degree  of  publicity  con- 
cerning the  manner  in  which  such  funds  are  handled 
and  all  of  the  records  and  accounts  thereof  kept. 

5.  To  make  suitable  provisions  concerning  the 
nature  and  amount  of  the  bonds  to  be  furnished  by 
the  Treasurer. 

6.  To  provide  definite  and  adequate  compensation 
for  the  Treasurer. 


30  Chicago  Bureau  of  Public  Efficiency 

In  order  that  legislation  of  the  nature  above  recom- 
mended may  be  enacted  so  as  to  become  effective  at  the 
time  that  the  next  County  Treasurer  takes  office,  the  Bu- 
reau recommends  to  His  Excellency,  Governor  Edward 
F.  Dunne,  that  in  case  he  shall  convene  the  Legislature 
in  special  session  he  include  the  subject  of  such  legisla- 
tion among  the  matters  to  be  considered  at  such  special 
session. 


THE  MANNER  IN  WHICH  THE  FUNDS  ARE  HANDLED  AND 
THE  ACCOUNTS  THEREOF  KEPT  AND  AUDITED. 


In  November,  1911,  the  Bureau  decided  to  undertake 
an  investigation  of  the  Treasurer's  records  and  accounts 
for  the  purpose  of  ascertaining,  if  possible,  how  the  pub- 
lic funds  in  that  office  were  being  handled  and  whether  or 
not  the  interest  thereon  was  being  accounted  for.  The 
decision  to  make  such  an  investigation  was  prompted  in 
part  by  the  fact  that  on  several  occasions  previous  to  that 
time  Treasurer  O'Connell  had  denied  the  right  of  tax- 
payers and  citizens  to  inspect  the  books  and  records  of 
his  office,  and  had  stated  to  officials  of  tlie  Bureau  that  he 
would  not  permit  an  examination  of  his  books  of  account, 
especially  his  ledger  accounts,  because  such  an  examina- 
tion might  disclose  information  which  he  did  not  wish  to 
become  public. 

PERMISSION  TO   INSPECT  BOOKS  DEMANDED  BY  BUREAU  TRUSTEES. 

The  Trustees  of  the  Bureau  took  the  position  that  pub- 
lic business — especially  the  public  business  of  an  official 
like  the  County  Treasurer,  who  is  entrusted  with  the  col- 
lection and  custody  of  public  funds — should  be  carried 
on  publicly.  They  were  of  the  opinion,  moreover,  that 
the  Treasurer  was  legally  obliged  to  open  his  books  and 
records  to  the  inspection  of  citizens  and  taxpayers  under 
reasonable  conditions.  Acting  on  this  latter  assumption, 
four  of  the  Trustees  of  the  Bureau — Julius  Rosenwald, 
Onward  Bates,  Charles  R.  Crane,  and  Henry  B.  Favill — 


32  Chicago  Bureau  of  Public  E-fficiency 

went  in  person  to  the  office  of  the  Treasurer,  and,  as  citi- 
zens and  taxpayers,  made  a  formal  demand  upon  Mr. 
O'Connell  for  permission  to  examine  his  books.  When 
this  demand  was  made,  Mr.  O'Connell  receded  from  his' 
former  position  to  the  extent  of  saying  that  the  ** public" 
records  of  the  office  might  be  inspected. 

INSPECTION   OF  THE  "PUBLIC"  RECORDS  PERMITTED— WHAT  THEY 

DISCLOSED. 

In  complying  with  the  demand  of  the  Trustees  of  the 
Bureau,  Mr.  O'Connell  turned  over  to  its  accountants  two 
separate  sets  of  books.  One  purported  to  contain  his  ac- 
counts as  'treasurer";  the  other,  his  accounts  as  both 
''county  collector'*  and  "town  collector."  Each  con- 
sisted of  a  general  ledger  with  its  accompanying  cash 
book  and  journal. 

The  most  superficial  inspection  of  the  ''public"  records 
at  once  disclosed  that  the  office  must  keep  other  rec- 
ords, particularly  in  connection  with  the  "collector's" 
accounts.  To  illustrate :  The  books  showed  that  millions 
of  dollars  in  tax  collections  had  been  paid  over  to  the 
several  taxing  bodies  of  the  county  before  any  entries 
appeared  on  these  "public"  records  to  indicate  that  the 
collections  had  been  made. 

Ultimately,  the  Bureau  accountants  discovered  certain 
supplemental  records  and  became  acquainted  with  the  na- 
ture of  their  contents.  The  accountants  were  refused 
access  to  these  other  records,  however,  so  far  as  being 
permitted  to  draw  off  detailed  data  therefrom  was  con- 
cerned, on  the  ground  that  the  supplemental  records  were 
not  "public"  records. 


County  Treasurer  of  Cook  County  33 

The  "public"  records  in  question  contained  no  entries 
showing  the  Treasurer's  accounts  with  the  banks,  and  the 
only  entry  relative  to  interest  on  bank  deposits,  which 
appeared  anywhere  in  the  books,  was  an  item  of  $145,- 
157.39  on  December  21,  1911.  This  amount  represented 
the  $150,557.39  reported  to  the  County  Board,  less  $5,400 
arbitrarily  deducted  for  ** attorneys'  fees."  Moreover, 
Mr.  O'Connell  informed  the  officials  of  the  Bureau  that 
neither  in  his  office  nor  elsewhere  did  he  keep  any  books 
or  records  showing  either  his  interest  or  deposit  accounts 
with  the  banks.    This  statement  is  incredible. 


THE  "TREASURER'S"  RECORDS  AND  ACCOUNTS. 

In  the  "treasurer's"  general  ledger  are  carried  all  ac- 
counts of  Cook  County  funds,  the  accounts  of  State  in- 
heritance tax  collections,  and  the  accounts  of  deposits 
made  in  connection  with  condemnation  proceedings.  Sev- 
eral other  minor  accounts,  representing  funds  of  which 
the  County  Treasurer  is  the  custodian,  are  also  carried 
in  this  ledger.  In  addition,  this  ledger  contains  ac- 
counts of  the  Treasurer,  acting  as  "eoc-officio  supervisor" 
of  the  towns  of  North  Chicago  and  Lake  View,  which 
show  a  part  of  his  transactions  in  connection  with  the 
small  park  bond  and  maintenance  funds  of  those  towns. 

During  the  period  covered  by  this  report  (December  5, 
1910,  to  December  21,  1911,)  the  total  receipts  of  the 
County  Treasurer  in  his  several  capacities  were  $55,- 
198,887.77 ;  the  disbursements  were  $51,457,566.99.  These 
amounts  included  (a)  the  balance  on  hand  December  5, 
1910,  and  (b)  transfers  between  funds.  Of  these  amounts, 


34  Chicago  Bureau  of  Piihlic  Efficiency 

$13,575,162.75  and  $11,454,622.14,  respectively,  were  cov- 
ered by  entries  in  the  ''treasurer's"  ledger.  The  follow- 
ing table  shows  in  summarized  form  on  what  accounts  the 
latter  amounts  were  received  and  disbursed. 


County  Treasurer  of  Cook  County 


35 


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36  Chicago  Bureau  of  Public  E-fJiciency 

The  $8,623,727.73  shown  in  the  preceding  table  as  re- 
ceipts credited  to  the  Cook  County  General  Fund  was 
made  np  of  the  following  items : 

*Town  Collectors'  Commissions $  178,554.85 

**Tax  Collections 3,738,662.19 

**County  Collector's  Commissions 409,622.14 

**Penalties  on  Delinquent  Taxes 113,663.24 

**Surplus  Costs  Collected  on  Account 

of  Tax  Sales 10,762.41 

fTax  Loans  2,895,000.00 

$Fee  Office  Collections 1,066,938.86 

Interest  on  Bank  Deposits 145,157.39 

Miscellaneous  Receipts 2,238.88 

Transferred  from  New  Hospital  and 

Infirmary  Fund 63,127.77 

Total $8,623,727.73 

•Deducted  from  tax  collections  made  for  taxing  bod- 
ies in  seven  city  towns  by  "town  collector."  (Includes 
$10,489.94  salary  retained  by  Treasurer  as  eoo-officio 
"town  collector.") 

**The  amounts  included  in  these  items  appear  as 
lump  sums  received  from  time  to  time  by  the  Treasurer, 
in  his  capacity  as  such,  from  himself  acting  as  "county 
collector." 

fBorrowed  from  banks. 

JPaid  over  to  Treasurer  by  county  fee  officers. 

The  receipt  and  disbursement  of  Cook  County  funds. 
State  inheritance  tax  collections  and  condemnation  de- 
posits include  the  most  important  transactions  of  the 
"treasurer's"  office. 

Cook  County  funds  come  to  his  hands  chiefly  in  the 
form  of  lump  sums,  being  (a)  transfers  from  himself  as 
"collector,"  (b)  remittances  by  the  several  county  fee 
officers,  (c)  loans  from  the  banks  in  anticipation  of  fu- 


County  Treasurer  of  Cook  County  37 

ture  tax  collections,  and  (d)  proceeds  from  bond  sales. 
The  nature  of  the  transactions  involved  in  the  receipt  of 
these  County  funds  is  such  that  no  extended  considera- 
tion of  them  is  called  for  in  this  connection.  The  ques- 
tion of  the  manner  in  which  the  ''collector's"  funds  are 
handled  and  accounted  for  prior  to  their  transfer  to  the 
"treasurer's"  records  will  be  discussed  in  connection 
with  the  "collector's"  accounts.  The  fee  office  receipts 
are  audited  in  detail  by  the  Comptroller  on  whose  war- 
rant they  are  paid  to  the  Treasurer.  So  far  as  the 
Bureau  accountants  were  able  to  ascertain,  disbursements 
of  County  funds  (except  in  the  case  of  "town  collect- 
ors' "  commissions  and  salary  and  the  attorneys'  fees  de- 
ducted from  the  item  of  interest  on  bank  deposits)  were 
made  on  warrants  drawn  by  the  Comptroller  after  ap- 
proval by  the  County  Board.  The  accounts  relating  to 
Cook  County  funds  were  checked  with  the  Comptroller's 
records  and  were  found  to  agree  therewith. 

Inheritance  taxes  collected  from  the  estates  of  de- 
ceased persons  are  accounted  for  directly  to  the  State 
officials. 

Condemnation  deposits,  as  the  item  indicates,  grow  out 
of  proceedings  for  the  condemnation  of  real  estate  for 
public  or  quasi-public  use  and  the  money  deposited  is 
ultimately  paid  over,  in  accordance  with  the  judgment  of 
the  court,  to  the  persons  whose  property  is  taken  through 
tlie  proceedings. 

Small  park  bond  and  maintenance  funds,  which  the 
Treasurer  handles  as  ex-officio  "town  supervisor"  of 
North  Chicago  and  Lake  View,  are  derived  from  the  sale 
of  bonds  and  from  tax  collections.  They  are  disbursed 
under  the  direction  of  the  Lincoln  Park  Board. 

Entries  in  the  "treasurer's"  ledger  are  posted  from  a 


38  Chicago  Bureau  of  Public  Efficiency 

cash  book  and  journal.  The  accountants  of  the  Bureau 
were  refused  any  information  as  to  the  form  or  nature 
of  the  data  furnished  the  bookeepers  operating  the  cash 
book  and  journal,  but  apparently  these  books  are  books 
of  original  entry.  The  entries  therein  which  were  exam- 
ined would  indicate  that  they  had  been  made  currently 
from  day  to  day  in  the  ordinary  course  of  business. 

A  complete  audit  of  the  *' treasurer's"  accounts  would 
involve  an  examination  of  the  data  supporting  the  en- 
tries in  the  cash  book  and  journal.  It  is  the  opinion  of 
the  Bureau  that  such  data  should  be  open  to  public  in- 
spection under  reasonable  restrictions.  So  far  as  the 
books  themselves  are  concerned,  however,  there  was  noth- 
ing on  their  face  to  indicate  any  irregularity  in  their 
keeping,  but,  since  the  Bureau  was  denied  access  to  the 
data  supporting  the  entries,  it  is  not  in  a  position  to  state 
whether  or  not  they  are  susceptible  of  complete  audit. 

THE  "COLLECTOR'S"  RECORDS  AND  ACCOUNTS. 

So  far  as  the  accountants  of  the  Bureau  have  been 
able  to  ascertain,  the  financial  records  of  the  Treasurer 
kept  in  his  capacity  of  (a)  ' 'county  collector"  and  (b) 
**town  collector"  of  the  seven  Chicago  towns  consist  of: 

1.      The  ** collector's"  GENERAL  TAX  WARRANTS.      TheSC 

are  books  prepared  by  the  County  Clerk.  They  show 
not  only  the  aggregate  amount  of  tax  levied  against  each 
person  or  piece  of  real  estate  but  also  the  distributive 
share  to  which  each  taxing  body  interested  therein  is 
entitled.  The  books  are  numbered  consecutively  from 
one  upward.  Some  time  after  each  collection  has  been 
made,  the  name  of  the  party  paying  the  item  and  the 
amount  and  date  of  payment  are  entered  in  a  column 
provided  for  that  purpose. 


County  Treasurer  of  Cook  County  39 

2.  The  delinquent  special,  assessment  lists  returned 
to  the  "county  collector"  by  the  local  collectors  of  the 
several  municipal  corporations  throughout  the  county. 
The  lists  returned  by  each  local  collector  show  the  num- 
bers of  the  warrants  for  collection  issued  to  him;  also 
the  amount  of  each  assessment  or  installment  thereof  to 
be  collected  by  the  "county  collector,"  and  the  interest 
accrued  thereon  to  April  1.  A  column  is  provided  on 
each  list  in  which  the  name  of  the  party  paying  each 
item  and  the  amount  and  date  of  payment  are  entered 
by  the  "county  collector"  after  he  has  received  the 
amount  returned  for  collection. 

The  "Collector's"  So-Called  "Private"  Records. 

3.  The  tellers'  daily  cash  collection  sheets.  When 
collections  are  made  on  account  of  either  general  taxes 
or  delinquent  special  assessments,  the  amounts  received 
are  immediately  distributed  on  one  of  these  sheets  by 
the  receiving  teller's  assistant  in  accordance  with  the  fol- 
lowing classification: 

A.  General  tax. 

(1)  Tax;  (2)  Interest;  (3)  Costs. 

B.  City  special  assessments. 

(1)  Assessment;  (2)  Interest;   (3)   Costs. 

C.  Country  special  assessments. 

(1)  Assessment;  (2)  Interest;  (3)  Costs. 

D.  Boulevard  and  park  special  assessments. 
(1)   Assessment;  (2)  Interest;  (3)  Costs. 

The  amounts  entered  on  these  sheets  are  totaled,  and, 
at  the  close  of  each  day's  business  the  tellers'  cash  is 
balanced  against  the  totals  shown  on  the  sheets. 

4.  A  file  of  duplicate  bills.  All  general  tax  and  spe- 
cial assessment  bills  are  made  in  duplicate.     As  each 


40  Chicago  Bureau  of  Public  Efficiency 

general  tax  bill  is  made,  the  number  of  the  warrant  book 
is  placed  thereon.  Special  assessment  bills  bear  the  num- 
ber of  the  warrant  issued  to  the  local  collector.  When 
collections  are  made,  the  duplicate  bills  are  retained  by 
the  receiving  tellers  who  send  them  to  the  auditing  di- 
vision. There  they  are  sorted  in  accordance  with  the 
warrant  numbers  appearuig  on  them,  and  the  total 
amount  collected  each  day  on  account  of  each  warrant 
is  ascertained  by  footing  the  items  on  all  of  the  dupli- 
cate bills  bearing  the  same  date  and  warrant  number. 

5.  The  auditor's  ledgees.  The  accounts  in  these  ledg- 
ers are  designated  by  numbers  which  correspond  to  the 
numbers  of  the  general  tax  and  special  assessment  war- 
rants certified  to  the  ''collector"  for  collection.  Each 
ledger  account  shows  the  total  amount  of  tax  or  assess- 
ment certified  for  collection  in  the  warrant  bearing  the 
corresponding  number,  and  each  day,  as  collections  are 
made,  the  total  amount  collected  on  account  of  any  war- 
rant is  posted  to  the  ledger  account  designated  by  the 
number  of  that  particular  warrant. 

The  ''Collector's"  ''Public''  Records.* 

6.  The  general  ledger,  cash  book  and  journal.  The 
books  which  the  ** collector"  terms  his  ''public"  records 
and  which  the  accountants  of  the  Bureau  were  permitted 
to  examine  consist  of  a  general  ledger  with  its  accom- 

*The  general  tax  warrants  and  delinquent  special  assessment  lists 
described  on  pages  38-39,  consisting''each*year  of  about  500  large  books,  are 
public  records.  When  entries  therein  have  been  completed,  these  books 
show  separately  the  amount  of  each  item  collected  Because  of  the  form 
in  which  they  are  required  to^be"  kept,"  however,  they  are  of  no  practical 
use  to  any  one  desiring  to  determine  at'any  time  either  the  status  of  the 
"collector's"  cash  account  or  the  status  of  his  accounts  with  the  different 
taxing  bodies;  nor  are  they  "of  any  practical  use  to  any  one  wishing  to  deter- 
mine the  amount  of  money'received'on'any  given  day,  or  during  any  given 
period.  Therefore,  in  the'diacussion  which  follows  relative  to  the  "col- 
lector's" "public"  records  "and  "accounts/lthese^warrant. books  have  not 
been  taken  into  consideration. 


County  Treasurer  of  Cook  County  41 

panying  cash  book  and  journal.  In  these  books  are  rec- 
orded the  ultimate  facts  relative  to  the  transactions  of 
the  "collector"  with  each  of  the  taxing  bodies  within 
the  county.  In  the  case  of  the  seven  Chicago  towns 
where  the  Treasurer  acts  as  both  "county  collector" 
and  "town  collector,"  but  one  account  with  each  tax- 
ing body  is  used  in  recording  his  transactions  ifi  both 
capacities. 

The  ''Public"  Records—What  they  Showed. 

The  public  records  submitted  for  inspection  showed 
entries  covering 

(a)  Costs  collected  on  delinquent  general  tax  and 
special  assessment  bills, 

(b)  Delinquent  special  assessments  collected  for 
the  City  of  Cliicago, 

(c)  All  remittances  to  the  several  taxins:  bodies 
on  account  of  both  general  taxes  and  special  assess- 
ments collected  for  such  bodies. 

These  entries  apparently  had  been  made  from  day  to 
day  in  the  ordinary  course  of  business.  To  this  extent 
the  books  seemingly  set  forth  bona  fide  transactions  as 
they  occurred.  This  was  not  true,  however,  of  the  en- 
tries which  purported  to  show  cash  received  by  the  "col- 
lector" from  the  following  sources: 

(a)  General  tax  collections. 

(b)  Delinquent  special  assessments  other  than 
those  returned  by  the  City  of  Chicago. 

(c)  Interest  penalties  collected  on  dehnquent 
general  taxes. 

The  "public"  records  showed  no  accounts  with  banks 
or  other  depositaries,  and  there  were  no  entries  in  these 
records  indicating  what  disposition  had  been  made  of  the 
public  funds  during  the  time  that  they  were  under  the 
control  of  the  "collector." 


42  Chicago  Bureau  of  Public  Efficiency 

Cash  Receipts  Withheld  from  '' Public"  Records. 

With  respect  to  cash  received  on  account  of  general 
tax  collections,  the  practice  was  not  to  show  its  receipt 
upon  the  '' public"  records  until  the  distributive  share  of 
each  taxing  body  in  certain  aggregate  amounts  collected 
had  been  determined.  When  these  distributive  shares 
had  been  ascertained,  entries  were  made  crediting  each 
taxing  body  with  its  respective  share.  At  the  same  time 
the  "collector"  charged  himself,  through  an  entry  in 
his  cash  account,  with  the  aggregate  amount  of  such 
credits.  These  entries  in  the  cash  account,  therefore, 
while  they  purported  to  show  the  receipt  of  cash  on  the 
dates  under  which  they  appeared,  in  fact,  constituted  the 
first  public  acknowledgment  by  the  ''collector"  that  he 
had  received  cash,  the  greater  part  of  which  in  most  in- 
stances had  been  in  his  hands  for  considerable  periods 
before  the  entries  were  made. 

During  the  year  1911,  charges  of  the  foregoing  nature 
were  made  to  the  ''collector's"  cash  and  the  correspond- 
ing credits  were  shown  in  the  accounts  of  the  several 
taxing  bodies  on  but  seven  different  dates.  The  follow- 
ing table  shows  the  dates  upon  which  these  entries  were 
made,  the  nature  of  the  collections  covered  by  each  entry, 
and  the  aggregate  amount  charged  to  cash  in  each  in- 
stance. 


County  Treasurer  of  Cook  Comity 


43 


Table  Showing  Dates  and  Amounts  of  Entries  on  the  "Collector's"  Cash  Account 

During  the  Year  1911;  Also  the  Nature  of  the  Items  Covered  by 

Each  Entry. 


Date  of  Entry 


Collections  Covered  by  Entry 


Aggregate 
Amount 
Charged 
to  Cash 


March  18,  1911, 
April  10, 
September  15, 


November  8, 
November  9, 
November  13, 

December  14, 


"Town  collector's"  collections  up  to  March  10, 
in  seven  city  towns 

State  taxes  collected  in  part  by  country'  town 
collectors  and  in  part  by  "county  collector".  . 

Railroad  taxes 

Collections  of  taxes  of  prior  years,  forfeiture  re- 
demptions, etc 


Taxes  (other  than  railroad  taxes,  taxes  for  prior 
years,  etc.,)  received  by  "county  collector" 
between  March  10,  and  December  15,  1911 

Total 


$  8,729,055.07 

189,619.64 

2,197,347.70 

147,210.98 
3,410.39 
9,591.63 

26,493,422.39 
$37,709,657.80 


Obviously,  the  above  amounts  were  not  received  as 
lump  suras  on  the  dates  shown.  \Miat  these  sums  really 
represent  are  tax  collections  made  months  before  and 
withheld  from  the  *^ public"  records  until  the  dates 
shown.  Of  the  $26,493,422.39,  entered  December  14,  it  is 
estimated  that  more  than  $23,000,000.00  was  collected 
prior  to  June  1. 

In  addition  to  the  amounts  represented  by  the  fore- 
ij^oing  items,  during  the  year  1911  the  ''collector"  re- 
ceived from  general  tax  collections  the  aggregate  amount 
of  $3,548,809.83.  This  sum  represents  a  part  of  the  dis- 
tributive share  of  Cook  County  in  the  aggregate  of  gen- 
eral tax  collections.  No  entries  showing  either  its  re- 
ceipt or  disbursement  appeared  on  the  "collector's" 
books.  On  those  records  it  was  neither  credited  to  the 
County  as  the  distributive  shares  of  other  taxing  bodies 


44  Chicago  Bureau  of  Public  Efficiency 

were  credited,  nor  was  it  charged  to  cash  as  the  entries 
in  the  preceding  table  were  charged,  and,  therefore,  it  is 
not  included  in  those  items.  The  sums  forming  this  ag- 
gregate amount  appeared,  however,  on  the  "treasurer's" 
books  as  charges  to  cash  on  account  of  general  tax  col- 
lections. The  following  table  shows  the  amounts  of  these 
several  sums  and  the  date  of  entry  on  the  ' '  treasurer 's ' ' 
books ; 

Date  Amount 

February  27,  1911 $  198,687.50 

April  17  139,200.00 

May  16  136,000.00 

May  31  125,500.00 

June  21 2,356,450.00 

June  21 97,000.00 

June  29 125,000.00 

August  7 325,000.00 

September  27   45,700.00 

December  20  272.33 

$3,548,809.83 

This  sum  of  $3,548,809.83  represents,  in  the  aggregate, 
a  part  of  the  share  of  the  County  in  each  of  a  very  large 
number  of  separate  tax  collections  made  from  day  to  day, 
beginning  about  January  10.  Although  much  of  this 
money  was  in  the  "collector's"  possession  long  prior 
to  the  date  of  the  respective  entries  on  the  "treasurer's" 
books,  these  entries  constituted  the  first  public  record 
of  the  fact  that  it  had  been  received. 

Cash  received  on  account  of  delinquent  special  assess- 
ments other  than  those  returned  by  the  City  of  Chicago 
was  entered  on  the  "collector's"  books  in  substantially 
the  same  manner  as  cash  received  from  general  tax  col- 
lections. The  following  table  shows  the  dates  upon  which 
the  respective  amounts  appearing  therein  were  charged 


County  Treasurer  of  Cook  County 


45 


to  the  cash  account,  and  also  the  periods  during  which 
the  several  sums  were  collected.  As  in  the  case  of  gen- 
eral tax  collections,  these  charges  to  the  cash  account 
constituted  the  first  public  record  of  the  fact  that  the 
money  had  been  received,  although  in  these  cases  the 
entries  themselves  evidence  the  fact  that  the  money  had 
been  in  the  "collector's"  possession  for  a  considerable 
period. 


Table  Showing  Amount  of  Special  Assessment  Collections  (Other  than  City  of 

Chicago)  Received  by  "County  Collector";  also  Periods  During  Which 

the  Several  Amounts  were  Collected  and  the  Dates  when  they 

were  Entered  on  "Collector's"  "Public"  Records. 


Date  of  Entry  on 

"Collector's' 

Records 


Periods  During  which  Collections  were  Made 


Amount 


May  8,  1011.. 

June  21 

July  12 

August  8 

August  17.  ... 
September  12. 
September  12. 
October  16.  .  . 
October  21. .  . , 
November  8.  . 
December  14. . 


April  1,  to  April  15,  1911 

April  16,  to  April  30 

May  1 ,  to  May  15 

May  16,  to  May  31 

June  1,  to  Juno  15 

June  16,  to  June  30 

July  1,  to  Julv  15 

July  16,  to  July  31 

August  1,  to  August  31 

.September  1,  to  September  30. 
October  1,  to  December  15. . . 


Total. 


%  22,671.83 
64,54-1.46 

187,612.76 
32,371.71 
26,603.24 
23,534.01 
28,818.88 
39,502.98 
74,002.76 
46.638.63 

152,063.92 

$698,365.18 


Certain  other  entries  showing  small  amounts  collected 
on  account  of  special  assessments  appeared  as  charges 
to  cash  during  the  year,  but  they  covered  items  of  such 
minor  importance  that  they  have  been  omitted  from  the 
table. 

Penalties  in  the  form  of  interest  at  the  rate  of  1%  a 
month  which  were  collected  from  day  to  day,  beginning 
May  2,  on  delinquent  general  taxes  were  not  entered  on 
the  ''collector's"  ''public"  records  at  all.     In  1911  the 


46  Chicago  Bureau  of  Public  Efficiency 

amount  accounted  for  aggregated  $113,663.24.  The  sev- 
eral sums  aggregating  this  amount  appear  on  the  'treas- 
urer's" books  as  cash  received  from  this  source  on  the 
dates  shown  in  the  following  table : 

Date  Amount 

June  30,  1911 $  22,810.94 

July  31 22,760.64 

August  31 26,585.80 

September  29 22,798.22 

October  31 6,000.00 

December  21 12,707.64 

$113,663.24 

This  case  again  illustrates  how  funds  were  collected 
but  not  put  upon  the  "public"  records  from  day  to  day 
in  the  usual  course  of  business. 

Conditions  Resulting  from  the  Manner 

in  Which  the  Accounts  Are  Operated. 

The  manner  in  which  the  '' collector"  keeps  his  ac- 
counts, the  distinction  which  he  makes  between  those 
records  of  his  office  which  he  terms  ''private"  and  those 
which  he  terms  "public,"  and  his  refusal  to  concede  the 
tax-paying  public  the  right  to  inspect  the  so-called  "pri- 
vate" records  operate  to  bring  about  the  following  con- 
ditions : 

1.  For  long  periods  after  the  time  when  the  money 
is  actually  received  by  the  "collector,"  the  entry  of 
the  receipt  of  millions  of  dollars  of  public  moneys  col- 
lected by  him  each  year  is  withheld  from  what  he  terms 
his  "public"  records.  It  is  estimated  that  of  the  $26,- 
493,422.39  shown  in  the  table  on  page  43,  which  was 
placed  of  record  December  14,  1911,  approximately  $23,- 


County  Treasurer  of  Cook  County  47 

000,000  was  actually  received  prior  to  June  1,  1911,  and 
that  practically  all  of  the  $2,197,347.70  of  railroad  taxes 
shown  on  September  15  was  collected  prior  to  May  1. 

2.  By  withholding  from  the  ''public"  records  entries 
showing  the  receipt  of  moneys  collected  on  account  of 
taxes  and  special  assessments,  and  at  the  same  time  by 
neglecting  to  credit  the  accounts  of  the  different  taxing 
bodies  throughout  the  county  with  collections  made  for 
them,  except  at  such  widely  separated  dates  as  appear 
in  the  tables  on  pages  43-45,  the  "collector"  can 
keep  the  taxing  bodies  in  ignorance  of  the  respective 
amounts  to  the  pajTnent  of  which  they  are,  from  time 
to  time,  entitled.  He  thus  avoids  making  remittances 
to  them  which  they  might  otherwise  demand.  This  point 
is  of  special  significance  in  view  of  the  tardy  manner  in 
which  he  remits  funds  to  all  of  the  taxing  bodies. 

The  entries  appearing  in  the  account  of  the  City  of 
Chicago  for  the  year  1911  are  shown  in  the  following 
statement.  They  are  typical  of  the  entries  in  the  ac- 
counts of  other  taxing  bodies,  and  illustrate  the  manner 
in  which  the  collections  and  disbursements  made  by  the 
"collector"  are  entered  uj^on  the  "public"  records  of  the 
office.  It  ^^^ll  be  noted  that  the  $5,586,768.35  credited  to 
this  account  on  March  18  was  not  entirely  paid  over 
to  the  City  until  April  28.  Of  the  $17,767,766.67  cred- 
ited on  December  14,  the  Bureau  estimates  that  more 
than  $15,500,000  was  actually  collected  prior  to  June  1. 
Because  of  the  failure  to  credit  the  City  with  the  latter 
amount  until  December  14,  it  appeared  from  the  face  of 
the  "collector's"  books  that  during  the  greater  part  of 
the  year  the  City  was  heavily  indebted  to  the  "collector" 
for  cash  advanced,  while  the  fact  was  that  during  the  en- 


48 


Chicago  Bureau  of  Public  Efficiency 


tire  time  the  ''collector"  was  actually  withholding  from 
the  City  funds  to  which  it  was  entitled. 


Statement  of  Account  of  County  and  Town  "Collector"  with  City  of  Chicago  for 

1911,  Showing  Dates  and  Amounts  of  Payments  Made  to  City;  Also 

Amounts  Collected  for  City  on  Account  of  General  Taxes  and 

Dates  when  Same  were  Entered  on  the  "Collector's" 

"Public"  Records. 


Date 


Payments  to  City 


Taxes  Collected  for  City 


February  24,  1911, 
March  18, 
March  24, 
April  18, 
April  28, 
May  16, 
May  29, 
June  19, 
June  29, 
July  17, 
July  27, 
August  17, 
August  21, 
August  28, 
September  16, 
September  29, 
October  18, 
October  30, 
November  17, 
November  28, 
November  29, 
December  16, 
December  19, 
December  22, 


$    550.000.00 

*  111,735.36 
472,499.69 

1,971,410.35 
3,000,000.00 
2,750,000.00 
1,000,000.00 
1,000,000.00 
1,000,000.00 
1,000,000.00 
1,000,000.00 
1,000,000.00 

*  41,762.59 
1,000,000.00 

971,690.32 
1,250,000.00 
1,250,000.00 
1,250,000.00 
1,250,000.00 

750,000.00 
1,250,000.00 

*  189,568.46 
400,000.00 

84,948.20 

$24,543,614.97 


March  18, 


t$  5,586,768.35 


Sept.  15, 


tt  1,102,921.24 


November    8,  ttt  83,345.04 

9,  ttt  1,689.94 

"          13   ttt  1  123.73 

December  14,'tttt  17,767  i766]67 


$24,543,614.97 


*  "Town  collector's"  commissions. 

**  County  Clerk's  extension  fees. 

***  "Coimty  collector's"  commissions, 

t  Collections  made  by  "town  collector"  January  10,  to  March  10. 

tt  Railroad  taxes. 

ttt  Taxes  prior  years,  forfeiture  redemptions,  etc. 

tttt  Collections  by  "county  collector"  March  10,  to  December  15. 

3.  By  concealing  his  accounts  with  the  banks  and  also 
the  amount  of  cash  received  by  him  daily  in  his  capacity 
as  ''collector,"  the  County  Treasurer  has  succeeded  in 


County  Treasurer  of  Cook  County  49 

preventing  not  only  the  tax-paying  public  but  also  tlie 
County  Board,  which  is  charged  with  the  duty  of  ap- 
proving his  accounts,  from  ascertaining  whether  or  not 
he  has  accounted  for  all  interest  earned  on  the  public 
funds  while  they  are  in  his  possession. 

The  important  part  which  the  practice  of  concealing 
daily  cash  receipts  plays  in  preventing  an  effective  check 
on  interest  earnings  is  apparent.  Both  the  amount  re- 
ceived and  the  length  of  time  that  the  money  is  retained 
by  the  Treasurer  are  essential  factors  in  computing  in- 
terest. Data  as  to  the  aggregate  amount  received  are  of 
little  or  no  value  unless  supplemented  by  data  as  to  when 
the  money  was  received  and  paid  out.  In  this  connection, 
attention  is  directed  to  tlie  fact  that  the  interest  figures 
presented  in  this  report  are  based  upon  estimated  daily 
cash  receipts.  Tlie  Bureau  was  forced  to  resort  to  the 
method  of  estimating,  described  on  pages  62-65,  because 
of  the  refusal  of  the  Treasurer  to  furnish  any  definite 
data  as  to  when  the  money  collected  by  him  was  received. 

REMITTANCES  TO  TAXING  BODIES. 

The  Kevenue  Act  provides  that  every  30  days  town 
collectors  shall  account  for  and  pay  over  taxes  collected 
by  them. 

The  Revenue  Act  also  provides  that  the  "county  col- 
lector" shall  file  a  statement  of  his  collections  \vith  the 
County  Clerk,  on  or  before  April  10,  of  each  year,  and 
that  on  or  before  April  15,  he  shall  pay  over  the  amount 
shown  in  such  statement.  The  Act  provides  further  that 
the  "county  collector"  shall  report  and  pay  over  to  cities 
and  other  local  taxing  bodies  delinquent  taxes  and  spe- 
cial assessments  collected  by  him  "at  least  once  in  every 
10  days  when  demanded  by  the  proper  authorities." 


50  Chicago  Bureau  of  Public  Efficiency 

The  foregoing  provisions  of  the  statutes  are  disre- 
garded altogether  by  the  ''county  collector"  of  Cook 
County  and  the  ''town  collector"  of  the  seven  Chicago 
towns. 

The  policy  with  respect  to  remitting  such  collections 
has  been  for  the  "collector"  to  hold  the  money  just  as 
long  as  he  could  safely  do  so,  while  the  authorities  of 
the  several  taxing  bodies  have  "bargained"  with  him  as 
best  they  could  in  order  to  get  the  funds  which  he  was 
unlawfully  withholding.  In  some  cases,  particularly 
those  of  the  City  of  Chicago  and  the  South  Park  Board, 
pajTuents  are  made  in  accordance  Avith  a  prearranged 
schedule.  The;  West  Park  Board  and  the  Lincoln  Park 
Board  receive  their  shares  as  their  needs  become  urgent, 
while  many  of  the  smaller  outlying  taxing  bodies  receive 
no  money  at  all  until  the  date  of  final  distribution  in 
December. 

The  heavy  responsibility  imposed  upon  the  Treasurer 
with  respect  to  the  safe  keeping  of  funds  collected  by 
him,  both  as  "county  collector"  and  as  "town  collector," 
was  pointed  out  in  the  previous  pages  of  this  report. 
The  present  Treasurer  has  repeatedly  complained  of  the 
burden  of  this  responsibility.  Nevertheless,  he  has  not 
taken  advantage  of  the  opportunity  which  he  has  to  re- 
lieve himself  of  this  responsibility  by  turning  the  collec- 
tions over  to  the  authorities  entitled  to  receive  them.  On 
the  other  hand,  he  has  actually  increased  his  burden  of 
responsibility  by  withholding  the  moneys  after  the  tax- 
ing bodies  were  legally  entitled  to  receive  them. 


County  Treasurer  of  Cook  County  51 

THE  AUDIT  OF  THE  TREASURER'S  ACCOUNTS. 

Notwithstanding  the  enormous  sums  of  public  money 
which  the  Treasurer  handles,  there  is  absolutely  no  audit 
of  his  accounts  except  such  as  may  be  conducted  by 
himself  and  his  bondsmen. 

By  the  terms  of  the  statute,  he  is  required  to  account 
to  the  County  Board,  and  in  a  perfunctory  way  he  does 
file  accounts  as  "treasurer."  He  is  required  also  to 
submit  a  statement  of  his  accounts  as  "collector"  to  the 
County  Board  for  its  approval  or  correction. 

In  the  face  of  these  explicit  statutory  requirements, 
the  present  Treasurer  has  denied  the  County  Board  ac- 
cess to  his  records  for  the  purpose  of  checking  up  his 
accounts  and  so  far  as  the  Board  has  attempted  to  dis- 
charge the  duties  imposed  upon  it,  it  has  gone  through 
tlie  empty  formality  of  approving  the  accounts  without 
having  examined  the  records  from  which  they  were 
made  up. 

The  conduct  of  Treasurer  0 'Council  in  refusing  to  per- 
mit an  audit  of  his  books  by  the  County  Board  cannot 
l)e  too  severely  condemned.  The  Bureau  recommends 
that  the  Board  insist  upon  its  right  to  examine  his  ac- 
counts and  records,  and  that  it  take  steps  immediately 
to  compel  him  to  submit  all  such  accounts  and  records 
to  a  complete,  thorough,  and  disinterested  audit. 


THE  QUESTION  OF  INTEREST  ON  FUNDS  IN  THE  CUSTODY 
OF  THE  COUNTY  TREASURER. 


Prior  to  the  administration  of  John  J.  Hanberg  as 
County  Treasurer,  which  began  in  December,  1902,  it 
bad  been  the  practice  of  the  incumbents  of  that  office  to 
retain  for  their  own  use  the  interest  on  public  funds  in 
their  custody. 

At  the  close  of  each  of  the  four  years  during  which 
he  held  the  office,  Mr.  Hanberg,  in  pursuance  of  certain 
pre-election  pledges,  turned  into  the  County  treasury 
a  certain  sum  as  interest  earned  on  the  funds  in  his  cus- 
tody during  that  year. 

John  B.  Thompson,  Hanberg's  successor,  before  his 
election  also  pledged  himself  to  turn  over  the  interest  on 
his  bank  deposits,  and  each  year  while  in  office  made 
certain  interest  payments  to  the  County. 

In  December,  1910,  the  present  County  Treasurer,  Wil- 
liam L.  0 'Council,  came  into  office,  having  previously 
made  pledges  similar  to  those  made  by  Hanberg  and 
Thompson,  and,  following  the  example  set  by  them,  in 
December,  1911,  he  accounted  to  the  County  for  $150,- 
557.39  as  interest  earned  during  the  first  year  of  his 
administration. 


54 


Chicago  Bureau  of  Public  Efficiency 


The  amounts  of  the  several  interest  payments  made 
by  the  three  treasurers  above  mentioned  are  shown  in 
the  following  table : 


Treasurer 

Year 

Amount 

John  J.  Hanberg 

1902—1903 

$  67,402.61 

"      "       " 

1903—1904 

73,021.77 

<(      ((       11 

1904—1905 

73,138.80 

(<      ((       (( 

1905—1906 

88,113.33 

John  R.  Thompson 

1906—1907 

123,762.84 

It              K                      (1 

1907—1908 

126,837.50 

<i       If          (( 

1908—1909 

117,266.91 

«             ((                    K 

1909—1910 

124,227.21 

WiUiam  L.  O'ConneU 

1910—1911 

150,557.39 

Each  of  these  payments  was  made  in  pursuance  of  a 
campaign  pledge.  So  far  as  the  Bureau  is  advised,  Mr. 
Hanberg  did  not  concede  the  legal  right  of  the  County  to 
the  interest.  Mr.  Thompson  denied  that  right  and  Mr. 
O'Connell  also  has  denied  it.  The  latter  insists  that  he 
is  under  no  legal  obligation  to  pay  over  the  interest,  but 
is  doing  so  because  of  the  pledge  he  made  when  a  candi- 
date. 

In  each  instance  before  turning  over  the  money,  the 
Treasurer  has  exacted  from  the  County  Board  the  pas- 
sage of  a  resolution  designed  to  protect  him  against  con- 
tingent claims  of  various  kinds  which  might  arise  as  a 
result  of  the  payments  to  be  made. 

The  ostensible  reason  for  demanding  such  a  resolution 
was  that  it  has  been  contended  that  the  taxing  bodies 
whose  moneys  are  collected  by  the  ''town  collector"  and 
''county  collector"  are  entitled  to  any  interest  earned 
on  those  moneys  while  they  are  in  the  custody  of  the 
"collector."  The  Bureau  does  not  believe  that  this  con- 
tention is  well  founded. 

During  the  Hanberg  administration,  these  resolutions 


County  Treasurer  of  Cook  County  55 

were  so  framed  as  to  protect  and  indemnify  him  only 
against  ''any  loss  or  damage  to  him  arising  out  of  any 
lawful  claim  that  any  other  municipal  corporation" 
might  ''have  and  establish  to  all  or  any  part  of"  the 
interest  paid  into  the  treasury  of  Cook  County,  and  which 
said  Hanberg  might  be  required  to  pay.  These  resolu- 
tions, moreover,  recited  that  they  were  passed  in  consid- 
eration of  Hanberg 's  paying  into  the  treasury  of  the 
County  ''all  interest  earned  and  received  by  him  on  all 
taxes  and  moneys  deposited  by  him  in  bank." 

With  the  advent  of  the  Thompson  administration,  the 
form  of  the  resolution  was  changed.  It  was  then  so 
drawn  as  to  recite  that  Thompson  had  deposited  in  banks 
all  the  moneys  and  taxes  collected  by  him  and  had  re- 
ceived certain  earnings  and  interest  upon  such  deposits; 
that  he  had  offered  to  pay  to  the  County  "certain  moneys 
derived  by  him  as  such  interest  and  earnings  accruing  on 
such  deposits,"  provided  he  was  "protected  against  and 
discharged  from  any  and  all  claims  of  every  nature  that 
have  heretofore  arisen,  or  may  hereafter  arise  by  virtue 
of,  or  incidental  to,  the  payment  or  non-payment  of  said 
interest  or  earnings,  *  *  *  or  the  payment  or  non- 
payment of  said  interest  to  said  Cook  County  or  any 
municipality  within  said  Cook  County."  The  resolution 
itself  ordered  that  the  County  "discharge  him  from  any 
and  all  claim  or  claims"  which  might  accrue  "by  reason 
of  the  payment  or  non-payment  of  said  interest  or  earn- 
ings upon  said  moneys,  as  aforesaid,  whether  accruing  to 
said  Cook  County  or  to  any  other  municipal  corpora- 
tion." 

In  tendering  the  $150,557.39,  paid  to  the  County  in 
1911,  Treasurer  O'Connell  submitted  a  resolution  in  the 


56  Chicago  Bureau  of  Puhlic  Efficiency 

form  used  by  Mr.  Thompson.  .  This  resolution  was 
passed  by  the  Board  at  the  time  it  accepted  the  money 
tendered. 

The  only  information  which  either  the  County  Board 
or  the  public  has  had  as  to  these  interest  payments  has 
been  and  is  contained  in  the  resolutions  thus  passed. 
Each  time  the  Treasurer  has  paid  over  a  lump  sum.  So 
far  as  the  proceedings  of  the  Board  disclose,  no  audit 
or  accounting  of  any  kind  has  been  had.  Not  even  the 
rate  at  which  the  amount  turned  in  was  computed  has 
been  disclosed. 

It  will  be  noted,  however,  that  the  Hanberg  resolu- 
tion was  passed  in  consideration  of  the  payment  to  the 
County  of  ''all  interest  earned  and  received"  by  him,  and 
that  it  indemnified  him  only  against  a  second  payment 
to  some  other  municipality  of  interest  which  he  had  al- 
ready paid  to  Cook  County.  There  was  no  pretense  of 
a  release  on  account  of  the  non-payment  of  any  interest. 

The  Thompson  resolution,  on  the  other  hand,  does  not 
purport  to  cover  all  interest  received.  It  recites  the  re- 
ceipt of  certain  interest  and  an  offer  to  pay  certain  inter- 
est to  the  County,  and  in  terms  it  releases  the  Treasurer 
from  all  claims  which  may  accrue  ' '  by  reason  of  the  pay- 
ment or  non-payment  of  said  interest"  "ivhether  accru- 
ing to  said  Cook  County  or  any  other  municipal  corpora- 
tion." 

The  question  which  naturally  suggests  itself  is:  The 
non-payment  to  Cook  County  of  what  interest  were  the 
Thompson  and  0 'Council  resolutions  designed  to  cover? 
Was  it  that  certain  interest  offered  and  paid,  or  that 
certain  interest  received  by  the  Treasurer?  It  does  not 
appear  from  the  resolution  that  the  amount  was  the  same 


County  Treasurer  of  Cook  County  57 

in  each  case.  It  would  seem  scarcely  necessary  for  the 
Treasurer  to  obtain  a  release  from  the  County  on  ac- 
count of  the  non-payment  to  it  of  money  which  he  actvr 
ally  paid.  A  second  query  might  well  be :  "What  was  the 
purpose  of  obtaining  such  a  release?  Was  either  of  them 
witliholding  interest  which  he  had  received  and  to  which 
the  County  was  and  is  entitled  I 

MR.  O'CONNELL  REFUSES  TO  TURN  OVER  INTEREST  EARNED  IN  1912. 

In  Januarj^  1913,  Treasurer  O'Connell  tendered  to  the 
County  Board  $162,212.53,  as  interest  earned  on  various 
funds  held  by  him  during  the  fiscal  year  ending  Decem- 
ber 2, 1912.  This  tender  was  made  on  condition  that  the 
Board  pass  a  resolution  in  the  form  adopted  in  1911. 
The  Finance  Committee  of  the  Board  recommended  the 
adoption  of  the  following  substitute  resolution : 

"Eesolved,  That  upon  the  payment  into  the  treas- 
ury of  Cook  County  by  the  said  William  L.  O'Con- 
nell, County  Treasurer  and  ex-officio  collector  as 
aforesaid,  of  the  aforesaid  sum  of  $162,212.53,  being 
interest  that  came  into  his  hands  during  the  fiscal 
year  ending  the  first  ^londay  in  December,  1912,  on 
various  funds  held  by  him  as  County  Collector,  as 
aforesaid,  the  County  of  Cook  do  and  will  save  and 
keep  the  said  William  L.  O'Connell  free  and  harm- 
less from  and  against  any  and  all  claims,  demands, 
costs  and  damages  for  which  he  may  be  or  become 
liable  to  any  person,  corporation  or  municipality,  by 
reason  of  the  pajnuent  of  said  sum  of  money  or  any 
part  thereof  into  the  treasury  of  said  Cook  County 
or  by  reason  of  the  non-pajTuent  of  said  sum  of 
money  or  any  part  thereof  to  any  such  person,  cor- 
poration or  municipality;  provided,  however,  that 
this  resolution  shall  in  noiuise  affect  any  claim,  aside 
from  said  sum  of  $162,212.53,  which  the  said 
County  of  Cook  may  have  against  the  said  William 


58  Chicago  Bureau  of  Public  Efficiency 

L.  O'Connell  for  any  interest  that  may  have  come 
into  his  hands  on  funds  held  by  him  as  County 
Treasurer  or  ex-officio  collector,  as  aforesaid,  and 
provided  further  that  this  resolution  shall  in  nowise 
affect  the  right  or  authority  of  the  Board  of  Com- 
missioners of  Cook  County  or  any  of  its  committees 
to  examine  and  audit  or  cause  to  be  examined  and 
audited  the  books,  records,  and  accounts  of  said 
County  Treasurer  and  ex-officio  collector,  as  afore- 
said. ' ' 

Mr.  O'Connell's  friends  on  the  Board  prevented  the 
adoption  of  the  substitute  resolution.  At  the  same  meet- 
ing Commissioner  Burg,  presumably  at  the  instance  of 
Mr.  O'Connell,  offered  the  following  resolution,  the 
adoption  of  which  was  prevented  by  those  members  who 
supported  the  Finance  Committee's  report: 

''Be  it  Resolved  and  Ordered,  That  said  William 
L.  O'Connell,  be  and  he  hereby  is  authorized  and 
directed  to  pay  into  the  Treasury  of  said  Cook 
County,  said  sum  of  $162,212.53  as  the  interest  and 
earnings  on  the  several  taxes  and  moneys  collected 
or  received  by  him  as  aforesaid,  and  that  in  consid- 
eration of  his  so  doing,  it  is  further 

"Resolved  and  Ordered,  That  said  Cook  County 
do  accept  said  sum  and  hereby  discharge  him  from 
any  and  all  claim  or  claims,  liability  or  liabilities 
heretofore  accruing  at  any  time,  or  which  may  here- 
after accrue  by  reason  of  the  payment  or  non-pay- 
ment of  said  interest  or  earnings  upon  said  moneys, 
as  aforesaid,  luhether  accruing  to  said  Cook  County, 
or  to  any  other  municipal  corporation  at  any  time 
whatsoever ;  and  it  is  hereby  further 

"Resolved,  That  said  Cook  County  do  hold  him 
free  and  hannless  from  any  and  all  such  claims  and 
all  costs  and  damages  for  which  he  may  be  or  be- 
come liable  with  reference  thereto,  and  provided, 
however,  that  this  resolution  shall  in  nowise  affect 
the  right  or  authority  of  the  Board  of  Commission- 
ers of  Cook  County  or  any  of  its  committees  to  exam- 


County  Treasurer  of  Cook  County  59 

ine  and  audit  or  cause  to  be  examined  and  audited 
the  books,  records  and  accounts  of  said  County 
Treasurer  and  ex-officio  collector,  as  aforesaid." 

The  vital  difference  in  these  two  resolutions  is  that 
the  Burg  resolution  was  designed  to  discharge  the  Treas- 
urer from  any  and  all  claims  which  might  accrue  by  rea- 
son of  the  non-payment  to  Cook  County  of  interest 
earned  other  than  the  $162,212.53  tendered,  while  the 
resolution  of  the  Finance  Committee  provided  that  such 
resolution  should  **in  nowise  affect  any  claim,  aside  from 
said  sum  of  $162,212.53,  which  the  said  County  of  Cook 
may  have  against  the  said  William  L.  0 'Council  for  any 
interest  that  may  have  come  into  his  hands  on  funds 
held  by  him  as  County  Treasurer  and  ex-oflScio  col- 
lector. ' ' 

In  view  of  ^^r.  0 'Council's  often  repeated  statement 
that  he  was  turning  over  all  of  the  interest  earned  on 
the  funds  held  by  him,  his  conduct  in  refusing  to  accept 
the  indemnity  offered  him  in  the  resolution  of  the 
Finance  Committee  is  not  easily  explained.  He  still  re- 
tains the  $162,212.53. 

THE  INVESTIGATION  BY  THE  BUREAU. 

The  investigation  of  the  Bureau  into  this  question  of 
interest  began  in  November,  1911,  when  Treasurer 
0 'Council  turned  his  ** public"  records  over  to  its  ac- 
countants for  examination. 

At  the  outset,  Mr.  0 'Council  stated  that  he  Kept  no 
books  or  records  showing  either  his  interest  or  deposit 
accounts  with  the  banks.  He  refused  also  to  supply  any 
infoiTuation  as  to  the  basis  upon  which  the  interest 
turned  over  to  the  County  in  1911,  amounting  to  $150,- 


60  Chicago  Bureau  of  Public  Efficiency 

557.39,  was  computed.  There  seemed  to  be  no  probabil- 
ity, therefore,  tliat  the  exact  amount  of  interest  which 
the  funds  in  his  hands  had  actually  earned  could  be  ascer- 
tained, since  the  length  of  time  that  money  is  permitted 
to  remain  in  the  custody  of  the  banks,  as  well  as  other 
conditions  of  deposit,  influence  them  in  making  interest 
rates. 

In  general  it  may  be  said,  however,  that  public  bodies 
having  funds  on  deposit  in  Chicago  banks  receive  inter- 
est at  a  rate  varying  from  2  per  cent  to  3  per  cent,  de- 
pending on  the  length  of  time  for  which  the  deposits  are 
made.  The  City  of  Chicago  receives  a  flat  rate  of  2^  per 
cent,  computed  and  paid  monthly,  on  its  average  daily 
balances  in  all  funds.  It  was  apparent,  therefore,  that 
if  the  accountants  of  the  Bureau  could  ascertain  the 
amounts  of  the  Treasurer's  daily  cash  balances  for  the 
fiscal  year  ended  December  3,  1911,  there  would  be  little 
difficulty  in  determining  whether  or  not  he  had  ac- 
counted for  as  much  interest  as  the  funds  in  his  custody 
might  reasonably  have  been  expected  to  earn.  On  the 
other  hand,  without  some  method  of  determining  or  ap- 
proximately estimating  these  balances,  there  seemed  to 
be  no  way  in  which  the  interest  figures  of  the  Treasurer 
could  be  checked. 

No  difficulties  were  encountered  in  computing  these 
balances  so  far  as  the  ''treasurer's"  accounts  described 
on  page  33  were  concerned. 

When,  however,  an  attempt  was  made  to  compute  these 
balances  with  respect  to  the  funds  handled  by  the  ''col- 
lector," the  situation  set  forth  on  pages  42-46  was 
met  with.  The  entries  which  should  have  shown  the  re- 
ceipt of  cash  from  day  to  day  were  not  on  the  "public" 
records.    On  the  other  hand,  it  was  known  that  the  "tell- 


County  Treasurer  of  Cook  County  61 

ors'  daily  cash  collection  sheets"  and  the  "auditor's 
ledgers, ' '  described  on  pages  39-40,  would  disclose  all  the 
data  which  it  was  necessary  to  have  in  order  to  make 
the  desired  computation,  and  the  Treasurer  was  appealed 
to  to  permit  an  examination  of  these  so-called  "private" 
records.  This  permission  was  denied  and,  for  the  time 
being,  the  inquiry  had  to  be  abandoned  for  lack  of  ma- 
terial upon  which  to  work. 

Before  the  matter  was  dropped  even  temporarily,  how- 
ever, copies  were  made  of  his  ledger  accounts  and  such 
data  as  the  accountants  considered  important  were  taken 
from  the  cash  book  and  journal. 

Several  months  afterwards  one  of  the  investigators 
of  the  Bureau,  working  in  the  auditor's  division  of  the 
Treasurer's  ofSce,  had  occasion  to  draw  off  from  one  of 
the  records  of  that  division  a  statement  showing  the 
total  number  of  tax  and  special  assessment  bills  upon 
which  collections  had  been  made  each  day  throughout 
the  year  1911. 

Meanwhile,  the  Bureau  accountants  had  been  seeking 
some  way  to  ascertain  those  items  of  the  "collector's" 
daily  cash  receipts  which  did  not  appear  upon  his  "pub- 
lic" records.  Receipts  derived  from  two  important 
sources  were  necessarily  involved  in  any  such  estimates, 
—namely,  (1)  general  tax  collections  made  up  of  volun- 
tary tax  payments  and  the  proceeds  of  tax  sales,  and 
(2)  special  assessments  other  than  those  returned  by 
the  City  of  Ciiicago.  The  chief  difficulty  which  the  ac- 
countants had  experienced,  however,  had  been  in  attempt- 
ing to  establish  a  basis  for  estimating  the  receipts  from 
voluntary  tax  payments.  The  discovery  in  the  auditor's 
division  of  the  record  mentioned  above  proved  a  prac- 
tical solution  of  this  problem. 


62  Chicago  Bureau  of  Public  Efficiency 

PROCEDURE  EMPLOYED  IN  ESTIMATING  CASH  RECEIPTS. 

The  following  procedure  was  employed  in  estimating 
the  cash  receipts  in  question: 

1.  As  a  preliminary  step,  the  total  collections  ac- 
counted for  by  the  ''collector"  on  account  of  general 
taxes  were  segregated  into 

(a)  Receipts  from  voluntary  payments; 

(h)  Proceeds  of  tax  sales. 
This  segregation  was  effected  by  tabulating  the  amount 
derived  from  each  tax  sale  for  the  year  1911,  as  shown 
on  the  tax  sale  records  in  the  County  Clerk's  oflSce,  and 
then  deducting  the  aggregate  amount  from  the  collections 
reported.  This  task  involved  the  tabulation  of  approxi- 
mately 15,800  separate  items.  The  table  was  so  made 
as  to  show  the  separate  and  aggregate  amounts  of  each 
day's  sales. 

2.  No  information  could  be  obtained  as  to  the  length 
of  time  which  elapsed  in  1911  between  the  date  when 
property  was  sold  at  the  tax  sale  and  the  date  when  the 
tax  buyer  paid  the  amount  of  the  sale  to  the  ''collector," 
but  an  examination  of  the  records  kept  by  the  County 
Clerk  in  1912  showed  that  in  that  year  a  period  of  about 
30  days  usually  elapsed  between  such  dates.  Therefore, 
a  date  30  days  later  than  the  date  of  sale  was  selected 
by  the  accountants  of  the  Bureau  as  the  date  upon  which 
to  charge  the  "collector's"  cash  with  the  aggregate 
amount  of  each  day's  sales  in  1911. 

3.  In  order  to  compute  the  average  amount  of  each 
general  tax  bill  in  the  manner  hereinafter  described,  it 
was  necessary  to  know  the  total  number  of  general  tax 
bills  issued  each  day.  These  totals  were  shown  on  the 
record    heretofore  mentioned   on   page   61,  which  was 


Covnty  Treasurer  of  Cook  County  63 

found  in  the  auditor's  di\4sion.  The  statement  originally 
drawn  off  from  that  record  by  the  Bureau  investigator 
had  been  prepared  for  another  purpose,  however,  and 
showed  only  the  grand  total  each  day  of  both  general 
tax  and  special  assessment  bills.  The  Bureau,  therefore, 
sought  a  second  opportunity  to  examine  the  record  in 
question  for  the  purpose  of  drawing  off  the  number  of 
general  tax  bills  only.  Permission  to  make  this  second 
examination  was  at  first  granted,  but  when  the  work 
was  partially  completed  this  permission  was  withdrawn 
and  the  member  of  the  Bureau  staff  doing  the  work  was 
ordered  from  tlie  office.  The  work  was  then  completed  by 
drawing  off  the  necessary  data  from  the  records  in  the 
custody  of  the  County  Clerk.  To  do  this  it  was  neces- 
sary to  tabulate  the  number  of  special  assessment  pay- 
ments made  each  day,  and  then  to  deduct  each  day's 
tot^l  from  the  grand  total  of  bills  for  each  day  shown 
on  the  auditor's  record.  This  operation  involved  the 
tabulation  of  aljout  35,000  separate  items  and  required 
the  services  of  four  men  for  a  period  of  about  ten  days. 
If  the  permission  at  first  granted,  and  then  withdrawn, 
to  examine  the  record  in  the  auditor's  division,  had  not 
been  withdrawn,  one  man  could  have  obtained  from  that 
record,  in  three  or  four  hours,  all  of  the  information  sub- 
sequently secured  through  tabulating  the  data  shown  on 
the  tax  records. 

Attention  is  directed  to  the  foregoing  incident  and  also 
to  the  work  involved  in  tabulating  the  tax  sale  figures 
described  on  page  62  and  to  the  task  of  estimating  each 
day's  receipts  described  on  page  64,  as  illustrating  the 
burden  imposed  upon  the  Bureau  by  the  refusal  of  the 
Treasurer  to  permit  an  inspection  of  the  ''tellers'  daily 
cash  collection  sheets"  and  the  "auditor's  ledgers."  One 


64  Chicago  Bureau  of  Public  Efficiency 

man  working  from  these  records  could  have  obtained  in 
a  few  hours  all  of  the  data  which  the  Bureau  finally 
compiled  as  a  result  of  the  very  laborious  operations 
mentioned.  These  operations  illustrate  even  more  forci- 
bly, however,  the  almost  insurmountable  difficulties  met 
with  by  citizens  and  taxpayers  seeking  information  con- 
cerning the  financial  transactions  of  the  Treasurer's 
office  and  the  manner  in  which  he  handles  public  funds — 
difficulties  which  are  caused  almost  entirely  by  the  policy 
of  secrecy  which  surrounds  the  administration  of  the 
office  and  the  refusal  to  permit  an  examination  under 
reasonable  restrictions  of  those  records  of  the  office 
which  the  Treasurer  terms  ''private"  records,  but  which 
are  kept  by  public  employes  at  public  expense. 

4.    The  total  amount  of  general  tax  collections  received 
from  voluntary  payments  was  divided  into 

(a)  Collections  received  as  "to^vn  collector"; 

(b)  Collections  received  as  ''county  collector." 
The  total  amount  received  by  the  "town  collector"  was 
then  divided  by  the  total  number  of  receipted  bills  is- 
sued during  the  time  collections  were  being  made  by  the 
"town  collector."  The  same  procedure  was  then  fol- 
lowed with  respect  to  the  amount  received  and  the  num- 
ber of  bills  issued  by  the  "county  collector."  The  pur- 
pose of  these  operations  was  to  fix  an  average  amount 
for  each  bill  issued  during  the  respective  periods.  To 
estimate  the  total  amount  collected  each  day  during  these 
periods,  the  average  amount  per  bill,  as  determined 
above,  was  then  multiplied  by  the  number  of  bills  issued 
each  day.  These  several  amounts  thus  estimated  as 
having  been  collected  each  day  were  then  set  up  in  the 
"collector's"  cash  account  as  money  received  by  him 
from  day  to  day  throughout  the  respective  periods. 


County  Treasurer  of  Cook  County  65 

For  the  purpose  of  determining  how  nearly  the  fore- 
going estimates  approximated  the  amount  actually  col- 
lected from  day  to  day,  a  test  was  made  on  12  of  the 
general  tax  warrant  books  which  had  been  returned  to 
the  County  Clerk.  The  collections  entered  on  these 
books  were  tabulated  so  as  to  show  the  amomit  of  money 
received  each  day.  These  figures  were  then  compared 
with  the  estimates  set  up  by  the  Bureau.  In  every  in- 
stance it  was  found  that  the  actual  collections  from  day 
to  day,  as  sho^vn  on  the  test  books,  were  proportionately 
greater  than  the  estimates  of  the  Bureau.  This,  of 
course,  means  that  more  money  than  the  Bureau  esti- 
mates would  indicate  was  actually  received  by  the  ''col- 
lector" during  the  early  part  of  the  collection  period. 
If  the  figures  on  the  Treasurer's  so-called  "private" 
records  could  be  examined,  they  would  probably  show 
that  the  interest  earnings  should  have  been  even  greater 
than  the  $281,526.18,  the  amount  computed  by  the  Bu- 
reau on  page  G6. 

5.  The  amounts  collected  on  account  of  delinquent 
special  assessments,  other  than  those  received  by  the 
City  of  Chicago,  as  shown  in  the  table  on  page  45,  were 
set  up  in  the  "collector's"  cash  account  as  money  re- 
ceived by  him  on  the  last  day  of  the  respective  periods 
during  which  the  "collector's"  books  showed  the  money 
was  received  by  him.  The  smaller  items  of  special  assess- 
ment receipts  mentioned  on  page  45,  but  not  shown  in 
the  table,  were  set  up  in  the  cash  account  as  money  re- 
ceived on  the  days  when  the  entries  were  made  in  the 
"public"  records. 

After  the  foregoing  estimates  and  adjustments  had 
been  made  with  respect  to  general  tax  and  special  assess- 
ment receipts,  the  "collector's"  cash  balance  at  the  close 


66  Chicago  Bureau  of  Public  Efficiency 

of  eacli  business  day  throughout  the  year  was  computed 
on  the  basis  of  the  estimated  and  adjusted  entries  made 
in  the  cash  account. 


THE  INTEREST  COMPUTATIONS  OF  THE  BUREAU. 

These  daily  cash  balances  of  the  ''collector"  were  then 
combined  ^^^th  the  daily  balances  shown  on  the  "treas- 
urer's" books.  The  average  daily  combined  balance  for 
each  month  of  the  year  was  then  determined,  and  com- 
pound interest  was  computed  on  these  average  balances 
at  the  rate  of  2^  per  cent  per  year.  This  is  the  method 
and  the  rate  used  by  the  banks  and  the  City  of  Chicago 
in  computing  interest  on  the  City's  deposits.  The  Bu- 
reau regards  a  rate  of  interest  of  2^  per  cent  as  con- 
servative, inasmuch  as  by  withholding  remittances  from 
the  City  and  other  taxing  bodies  the  Treasurer  was  ap- 
parently able  to  maintain  a  balance  of  $10,000,000  or 
more  continuously  for  a  period  of  more  than  six  months. 

The  aggregate  amount  produced  by  these  computations 
was  $281,526.18,  or  $130,968.79  more  than  the  Treasurer 
paid  over  to  the  County. 

It  is  quite  probable,  however,  that  Treasurer  0 'Cou- 
ncil should  have  received  and  turned  over  to  the  County 
even  more  than  $281,526.18  as  interest  earned  on  his 
bank  deposits  during  1911.  During  that  year  he  paid 
over  to  the  County  only  $113,663.24  on  account  of  pen- 
alties collected  by  him  on  delinquent  taxes.  If  $113,663.24 
is  all  he  received  in  fact  from  this  source,  then  he  must 
have  collected  prior  to  May  2  more  than  the  amounts 
which  the  Bureau  has  estimated  he  collected  up  to  that 
date.  The  interest,  therefore,  which  he  should  have  re- 
ceived from  his  general  balances  should  have  been  even 


County  Treasurer  of  Cook  County  67 

-greater  than  $281,526.18,  the  amount  estimated  by  the 
Bureau.  If  he  collected  prior  to  May  2  only  the  amounts 
which  the  Bureau  has  estimated  from  the  records  avail- 
able to  it,  then  he  must  have  received  as  penalties  for 
delinquency  more  than  $113,663.24.  One  of  these  alterna- 
tives is  irresistible.  The  Bureau  believes  that  the  cor- 
rect conclusion  is  that  he  has  not  accounted  by  even 
more  than  $130,000  for  all  of  the  interest  on  general  bal- 
ances which  he  did  receive  or  could  have  received  and, 
in  the  full  discharge  of  his  duty  to  the  public,  he  should 
have  received  and  paid  over  to  the  County. 

The  amount  of  money  handled  by  the  Treasurer  dur- 
ing the  year  1912  was  presumably  greater  than  that  han- 
dled by  him  in  1911.  Notwithstanding  this,  he  tendered 
to  the  County  Board  only  $162,212.53  at  the  close  of  1912. 

The  Bureau  recommends  to  the  County  Board  that  it 
demand  from  Treasurer  O'Connell  a  full  and  complete 
accounting  in  the  matter  of  interest  on  bank  deposits 
and  all  other  fees,  perquisites,  and  emoluments  of  his 
office  and  that,  in  case  of  his  failure  to  make  such  an  ac- 
counting, the  Board  institute  legal  proceedings,  not  only 
to  compel  him  to  render  an  account,  but  to  recover  such 
interest  or  other  fees,  perquisites,  and  emoluments,  if 
any,  as  he  may  have  failed  to  pay  over  to  Cook  County. 


187 


uNivERsrry  of  illinois-urbana 


3  0112  060744973 


CHICAGO      BUR" 

OP 

PUBLIC  EFFICIENCY 

Purposes  as  Stated  in  the 
Plan  of  Organization 

(1)  To  scrutinize  the  systems  of  accounting  in 
the  eight  local  governments  of  Chicago. 

(2)  To  examine  the  methods  of  purchasing 
materials  and  supplies  and  letting  and  executing 
construction  contracts  in  these  bodies. 

(3)  To  examine  the  payrolls  of  these  local 
governing  bodies  with  a  view  of  determining  the 
efficiency  of  such  expenditures. 

(4)  To  make  constructive  suggestions  for  im- 
provements in  the  directions  indicated  under  1,  2 
and  3,  and  to  co-operate  with  public  officials  in 
the  installation  of  these  improved  methods. 

(5)  To  furnish  the  public  with  exact  informa- 
tion regarding  public  revenues  and  expenditures, 
and  thereby  promote  efficiency  and  economy  in 
the  public  service. 


